finac quiz 1
Deficit
A negative balance in RE
current liabilities examples
AP (accounts payable) NP (notes payable) Taxes Payable Dividends Payable Misc. Payable Unearned Revenue
Retained earnings (RE)
Amount of earnings (not cash) reinvested in the corporation and not paid out as dividends
Ending RE equation
Beginning RE + Net income - dividends
Current short terms asset types
Cash Prepaid Insurance AR (accounts receivable), NR(notes receivable) Inventory Supplies on Hand Marketable Security
current ratio
Current Assets/Current Liabilities
Liability meaning
Debts/obligations owed to creditors. Creditors' claims to the company assets
Dividends
Distributions of earnings to stockholders - they can be in form of stock or cash - they are not expenses of the organization
long term liabilities
Due over 1 year from the balance sheet date
current liabilities
Due within 1 year or less of the balance sheet date
Established the U.S GAAP (generally accepted accounting principles)
FASB
FASB meaning
Financial Accounting Standards Board
Intangibles
Goodwill (GW) Patents Copyrights Trademarks
IASB
International Accounting Standards Board
What did the IASB establish?
International financial reporting standards
Property, Plant & Equipment
Land Building Machinery Equipment Trucks/Auto Furniture/Fixtures
Faithful Representation acronym
N- Neutral (unbiased) F- Free from error (accurate) C- Completeness (full disclosure)
long term liabilities examples
NP (notes payable) Bonds Pay Mortgage Payment Lease Liability
Net income equation
Net Income = Revenues - Expenses
Who is responsible for a corporation's financial statements?
Outstanding Corporate Management
Relevance acronym
P- predictive value M- Materiality (is it significant) C- Confirmatory Value (feedback)
Established the U.S GAAS (Generally Accepted Auditing Standards)
PCAOB(Public Company Accounting Oversight Board)
Owner's equity examples
Preferred Stock (no voting rights) Common Stock (voting rights) APIC (Addition, Paid-in capital) RE (ending)
What are the primary qualities the information possess?
Relevance and faithful representation
Accrual Accounting
Revenues are recognized when they are earned and expenses are recognized when they are incurred, not necessarily when cash is received or paid
What government agency has regulatory responsibility for the financial information issued by companies whose stock is publicly traded?
SEC(Security and Exchange Commission
In 2002 what act was passed that continues to have major impact on the accounting and auditing profession?
SOX (Sarbanes-oxley)
What are the major forms of business organizations?
Sole proprietor(unicorporate) partnership corporation
Why was the SOX Act passed in 2002
To establish the PCAOB
Most liquid assets
cash Marketable Security AR
SOX requires CEOs and CFOs to
certify that the FS and Footnotes Disclosures are fair and there are no material statements (no fraud)
Owner's equity meaning (AKA STOCKHOLDERS' EQUITY/SHAREHOLDERS' EQUITY)
ownership group's claim on assets, this represents the amount invested in the business by the owners.
Accrual Basis
revenues are recognized when earned and expenses are recognized when incurred
Long term assets (fixed assets)
to be used in the business for >1 year from the balance sheet date
current short term assets
will be used up or converse to cash within 1 year or less from the Balance Sheet date
