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zAccounting > Powerpoint 1 > Flashcards

Powerpoint 1 Flashcards

1
Q

Accounting definition

A
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2
Q

Self proprietorship

A

A business owned by one person

ex. A small owner-operated barber shop

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3
Q

Partnership

A

A business owned by two or more persons associated as partners

often because indivdual lacks sufficient economic resources

ex. lawyers, artchitects, CPAs

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4
Q

Corporation

A

A business organized as a seperate legal entity owned by stockholders

Investors receive shares of stock to indicate their ownership claim

Ex. NYSE members

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5
Q

Most of business is done by what?

Most common business is what?

A

Most of business- corporation

Most common - sel proprietorshipp and partnership

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6
Q

External users

A

Creditors/lendors

Private investors

Vendors

Customers

Taxing authorities

Regulators

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7
Q

Internal users

A

Managers who plan, organize, and run a business

ex. marketing manager, production supervisor, finance director, company officer

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8
Q

Investors

A

Use accounting information to make decisions to buy, hold, or sell stock

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9
Q

Creditors

A

Use accounting information to evaluate the risks of selling on credit or lending money

external user

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10
Q

Specific examples of external users

A

Taxing authorities

Customers

Labor unions

Regulatory Agencies

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11
Q

Ethics in financial reporting

A

Regulators and lawmakers concerned that the conomy would suffer if investors lost confidence in corporate accounting due to unethical financial reporting

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12
Q

3 business activities

A

Financing

Investing

Operating

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13
Q

Creditors

A

Persons or entities to whom a company owes money

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14
Q

Liabilities

A

Amonts owed to creditors

Have the legal right to be paid according to pre-determined schedule

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15
Q

Common stock

A

Total amount paid in by stockholders for the shares they purchase

Investors have no legal right to corporate cash until claims of creditors are satisfied

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16
Q

Dividends

A

Payments to stockholders

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17
Q

Two financing activities

A
  1. Borrow money
  2. Issue (sell) shares of stock
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18
Q

Investing activities

A

Involves the purchase of resources a company needs in order to operate

buying of LONG TERM assets

19
Q

Assets

A

Resources owned by a business

Eg. property, plant, and equipment, investments, cash

20
Q

Revenue

A

The increase in assets resulting from the sale of a product or service in the normal course of business

21
Q

Inventory

A

Goods (assets) available for future sales to customers

22
Q

Account receivable

A

right to receive money in the future

23
Q

Expenses

A

The costs of assets consumed or services used in the process of generating revenues

es. cost of goods sold, selling expenses, marketing expenses, administrative expenses

24
Q

Accounts payable

A
25
Q

Operating activities

A

Revenue

Inventory

Account receivable

Expenses

Accounts payable

26
Q

Net income =

A

Revenues > expenses

27
Q

Net loss =

A
28
Q

4 financial statements (in order)

A

IRBS

  1. Income statement
  2. Retained Earnings statement
  3. Balance Sheet
  4. Statement of Cash Flows
29
Q

Income statement

A

Reports the successes or failures of the company’s operations for a period of time

Investors and creditors are interested in past income to predict future income

  • relates to a company’s stock price
  • helps creditors determine if company has ability to repay in the future
30
Q

Retained Earnings Statement

A

Shows the amounts and causes of changes in retained earnings during the period

Allows users to evaluate the dividend payment practices

  • investors may prefer high or low dividend payouts
  • creditors take notice because dividends reduce ability to repay debts
31
Q

Retained earnings

A

The net income retained in the corporation

32
Q

Balance Sheet

A

Reports assets and claims to assets at a specific point in time

2 types of claims

  1. liabilties (claims of creditors)
  2. Claims of owners ( stockholder’s equity)

Assets = liabilities + stockholders’ equity

33
Q

Basic Accounting Equation

A

Assets = liabilities + stockholders’ equity

34
Q

Statement of Cash Flows

A

Provide financial information about the cash receipts and cash payments of a business for a specific period of time

Reports cash effects of a company’s operating, investing, and financing activities as well as net increase or decrease in cash

35
Q

Questions statement of Cash Flows answers

A

Where did the cash come from?

How was the cash used during the period?

What was the change in the cash blance during the period?

36
Q

Annual Report

A

Publicly traded companies MUST provide an annual report

Include:

Financial statements

MD&A

Notes to financial statements

Independent Auditor’s Report

37
Q

Management Discussion & Analysis

A

Includes:

Ability to pay near-term obligations

Ability to fund operations and expansion

Its results of operations

*SEVERAL SUBJECTIVE STATEMENTS AND OPINIONS

38
Q

Notes to the Financial Statements

A

Clarify the financial statements and provide additional detail

Info not all quantifiable

-descriptions of policies and methods

INTEGRAL

39
Q

Auditor’s Report

A

Independent outside auditor peforms it

States auditor’s opinion as to the fairness of the statements

auditor’s must have CPA

Unqualified opinion- financial statements are fair

40
Q

Unqualified opinion

A

Issued when the auditor is satisfied that the financial statements provide a fair representation of the company’s financial position and results of operations are in accordance with GAAP

41
Q

Why so much in annual report?

A

Not all relevant info in financial statements

Users are interested in non-financial info

42
Q

IFRS properties

A

Principles based

Developed by the International accounting Standards Board (IASB)

Non-US companies to not have to comply with SOX

43
Q

U.S. GAAP properties

A

Rules based

Developed by the Financial accounting standards board (FASB)

SOX applies to large public companies on U.S. exchanges

44
Q
A

zAccounting (31 decks)

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