Financial Accounting accounting information and analyses prepared for people outside the organization
asset Anything of value that is owned and results in future economic benefit
liability An amount owed by a business
Assets = Liabilities + Owner's Equity
Accounting Equation Assets = Liabilities + Equity
If an item costs $100 to make and is sold for $150, what is $150
the amount of revenue per unit?
If an item costs $100 to make and is sold for $150, what is $50
the amount of gross profit?
shareholder A person who invests in a corporation by buying stock and is a partial owner
Corporation Advantages limited liability, ease of transfer of ownership, perpetual life, external sources of
funds, expansion potential
Corporation Disadvantages -double taxation
-cost of setup and report filing
annual report a yearly statement of the financial condition, progress, and expectations of an
organization
How is an uncertain future loss reported in financial Disclosed in financial statements
statements?
, Materiality Principle states that an amount can be ignored if its effect on the financial statements is
unimportant to users' business decisions
presents fairly financial information that contains no material misstatements in accordance with an
accepted standard for financial reporting
Income Statement A financial statement that reports a company's revenues and expenses and
resulting net income or net loss for a specific period of time.
Balance Sheet A financial statement that reports assets, liabilities, and owner's equity on a specific
date.
The statement of cash flows reports: Cash inflows and outflows for an accounting period
What are the activities listed on the Statement of Cash Operating, Investing, Financing
Flows?
If the revenue of Company A is $100,000, the cost of $45,000
goods sold is $55,000, selling and administrative costs are
$15,000, what is gross profit?
If the revenue of Company A is $100,000, the cost of $30,000
goods sold is $55,000, selling and administrative costs are
$15,000, what is net income?
If a company spends $75,000 on expansion of their Asset
production facility, where would those costs be recorded
(asset, liability, revenue, or expense)?
If a company spends money on an item whose future Expense
economic benefit cannot be determined, how should they
be recorded (asset, liability, revenue, or expense)?
If a company owes another company money, where could liability
that amount be found (asset, liability, revenue, or
expense)?
current assets cash and other assets expected to be exchanged for cash or consumed within a
year
asset Anything of value that is owned and results in future economic benefit
liability An amount owed by a business
Assets = Liabilities + Owner's Equity
Accounting Equation Assets = Liabilities + Equity
If an item costs $100 to make and is sold for $150, what is $150
the amount of revenue per unit?
If an item costs $100 to make and is sold for $150, what is $50
the amount of gross profit?
shareholder A person who invests in a corporation by buying stock and is a partial owner
Corporation Advantages limited liability, ease of transfer of ownership, perpetual life, external sources of
funds, expansion potential
Corporation Disadvantages -double taxation
-cost of setup and report filing
annual report a yearly statement of the financial condition, progress, and expectations of an
organization
How is an uncertain future loss reported in financial Disclosed in financial statements
statements?
, Materiality Principle states that an amount can be ignored if its effect on the financial statements is
unimportant to users' business decisions
presents fairly financial information that contains no material misstatements in accordance with an
accepted standard for financial reporting
Income Statement A financial statement that reports a company's revenues and expenses and
resulting net income or net loss for a specific period of time.
Balance Sheet A financial statement that reports assets, liabilities, and owner's equity on a specific
date.
The statement of cash flows reports: Cash inflows and outflows for an accounting period
What are the activities listed on the Statement of Cash Operating, Investing, Financing
Flows?
If the revenue of Company A is $100,000, the cost of $45,000
goods sold is $55,000, selling and administrative costs are
$15,000, what is gross profit?
If the revenue of Company A is $100,000, the cost of $30,000
goods sold is $55,000, selling and administrative costs are
$15,000, what is net income?
If a company spends $75,000 on expansion of their Asset
production facility, where would those costs be recorded
(asset, liability, revenue, or expense)?
If a company spends money on an item whose future Expense
economic benefit cannot be determined, how should they
be recorded (asset, liability, revenue, or expense)?
If a company owes another company money, where could liability
that amount be found (asset, liability, revenue, or
expense)?
current assets cash and other assets expected to be exchanged for cash or consumed within a
year
