WGU C213 Accounting for Decision Makers - Important Terms Questions and Answers 100% Correct

WGU C213 Accounting for Decision Makers - Important Terms Questions and Answers 100% Correct A statement of financial position shows the financial resources the company owns or controls and the claims on those resources. - Answer- Balance Sheet Assets = Liabilities + Equity - Answer- Accounting Equation Assets, Liabilities and Equity - Answer- Balance Sheet Contains? The portion of the balance sheet that represents the capital received from investors in exchange for stock (paid in capital), donated capital and retained earnings. - Answer- Stockholders Equity Traditionally centered on the reporting of tangible assets such as cash, inventory, and buildings - Answer- Accounting Focus The ease with which the item can be turned into cash. - Answer- Liquidity How much owners originally invested in the business, plus how much profit they have left in the business. (liabilities - assets = ownership interest.) - Answer- Owners Equity Paid-in-Capital and retained earnings. - Answer- What are the two primary components of Stockholders Equity? Represents the portion of stockholders equity that has not been paid to the owners as dividends. - Answer- Retained Earnings The value of the assets given in exchange for shares of stock. - Answer- Paid-in-Capital Shown as a subtraction in the stockholders equity section of the balance sheet. - Answer- Treasury Stock The idea that personal financial activity is kept separate from business financial activity. - Answer- Entity Concept An accounting technique that values an asset for balance sheet purposes at the price paid for the asset at the time of its acquisition. - Answer- Historical Cost Convention Allows the readers of financial statements to assume that the company will continue on long enough to carry out its objectives and commitments. - Answer- Going Concern Assumption A company's financial performance for a specific period of time. - Answer- Income Statement The amount of assets created through the performance of business operations. - Answer- Revenue Individual cash flow items that are classified according to three main activities: operating, investing, and financing. - Answer- Statement of Cash Flows Those activities whereby cash is obtained from, or repaid to, owners and creditors. - Answer- Financing Activities These provide additional information pertaining to a company's operations and financial position and are considered to be an integral part of the financial statements. - Answer- Notes to Financial Statements Break down all estimates and judgement into one number in the financial statements. - Answer- Recognition To skip the financial statements and just rely on the note to convey the information to users. - Answer- Disclosure