chapter 1 & 2 Flashcards Preview

Business 241- southern union > chapter 1 & 2 > Flashcards

Flashcards in chapter 1 & 2 Deck (65)
Loading flashcards...
1

the role of accounting in business

to provide information for managers to use in operating the business

2

internal users

-include managers and employees
-involved in managing and operating the business

3

the area of accounting that provides internal users with information is called

managerial accounting or management accounting

4

object of management accounting

to provide relevant and timely information for managers and employees decision-making needs

5

managerial accountants employed by a business are employed in

private accounting

6

external users

-accounting information include investors, creditors, customers, and the government
-not directly involved in managing and operating the business

7

the area of accounting that provides external users with information is called

financial accounting

8

objective of financial accounting

to provide relevant and timely information for the decision making needs of users outside the business

9

business entity concept

limits the economic data in an accounting system ti data related directly to the activities of the business

10

cost concept

amounts are initially recorded in the accounting records at their cost or purchase price

11

how do business transactions affect the accounting equation

an economic event or condition that directly changes an entity's financial condition or its results of operations

12

the accounting equation

assets = liabilities + Owner's Equity
assets - liabilities = Owner's Equity

13

journal

the initial record in which the effects of a transaction are recorded

14

ledger

a group of accounts for a business

15

capital account

an account used for a proprietorship that represents the owner's equity

16

drawing

the account used to record amounts withdrawn by an owner of a proprietorship

17

liabilities

the right of creditors that represents debts of the business

18

owner's equity

the owner's right to the assets of the business

19

expenses

assets used up or services consumed in the process of generating revenues

20

financial statements

financial reports that summarize the effects of events on a business

21

all financial statements are identified by

the name of the business, the title of the statement, and the date or period

22

data presented in a balance sheet are for

a specific date

23

data presented in the income statement, statement of owner's equity, and statement of cash flows are

for a period of time

24

income statement reports

-the revenues and expenses for a period of time, based on the matching concept
-prepared first

25

statement of owner's equity

-reports the changes in the owner's equity for a period of time
-it is prepared after the income statements because of the net income or net loss for the period must be reported in this statement

26

balance sheet

a list of the assets, liabilities, and owner's equity as of a specific date, usually at the close of the last day of a month or year

27

balance sheet

a list of the assets, liabilities, and owner's equity as of a specific date, usually at the close of the last day of a month or year

28

account form
(balance sheet)

assets on the right and liabilities and owner's equity on the left
assets | liabilities - owner's equity

29

The financial statement that reports the revenues and expenses for a period of time such as a year or a month is the

income statement

30

The financial statement that reports the assets, liabilities, and stockholders' (owner's) equity at a specific date is the

balance sheet