FAC1502 ASSIGNMENT 3 SEMESTER 2 2024 DISTINCTIONS
GUARANTEED
INTRODUCTORY FINANCIAL ACCOUNTING
Assets - (ANSWER)Things of value that a company owns or controls and that have future
economic benefit (e.g., cash, accounts receivable, inventory, property, plant, and equipment).
Liabilities - (ANSWER)Obligations or debts the company owes to others. Examples include
Accounts Payable (typically paid within 30 days) and Notes Payable (long-term debts like loans).
Shareholders' Equity - (ANSWER)Represents the owners' interest in the company, including
common shares and retained earnings (profits reinvested in the business rather than paid as
dividends).
Revenue - (ANSWER)What the company earns from sales of goods or services. Any term with
'revenue' in it refers to this (e.g., sales revenue).
Expenses - (ANSWER)Costs incurred to earn revenue, such as salaries, cost of goods sold, and
interest expenses.
Dividends - (ANSWER)Payments made to shareholders from retained earnings, reducing the
amount available to reinvest in the company.
Tangible Assets - (ANSWER)Physical assets that can be touched, like buildings and machinery.
Intangible Assets - (ANSWER)Non-physical assets that have value, like patents and goodwill.
Goodwill - (ANSWER)An intangible asset representing the extra value of a company beyond its
net assets, often from brand reputation and customer relationships.
,Contributed Capital - (ANSWER)Money invested in a company by its shareholders through
purchasing stock.
Retained Earnings - (ANSWER)Profits that a company keeps for reinvestment instead of
distributing as dividends.
Statement of Financial Position (Balance Sheet) - (ANSWER)Reports a company's financial
position at a specific point in time, showing assets, liabilities, and shareholders' equity.
Statement of Earnings (Income Statement) - (ANSWER)Measures the performance of a business
over a specific period of time (e.g., 'for the year ended December 31, 2020').
Net earnings (net income) - (ANSWER)Net earnings = Revenues - Expenses. This is a key
indicator of a company's profitability.
Depreciation - (ANSWER)An expense representing the allocation of the cost of tangible assets
over their useful life, reflecting the usage of long-term assets to generate revenue.
Statement of Changes in Equity - (ANSWER)Shows changes in shareholders' equity over the
accounting period.
Statement of Cash Flows - (ANSWER)Reports the company's ability to generate cash and how it
was used across three main activities: Operating Activities, Investing Activities, and Financing
Activities.
Accrual Accounting - (ANSWER)Financial statements use the accrual accounting method,
meaning that transactions are recorded when they are incurred, not necessarily when cash is
exchanged.
Current Ratio - (ANSWER)Current Ratio = Current Assets / Current Liabilities (measures a
company's liquidity).
, Debt Ratio - (ANSWER)Debt Ratio = Total Liabilities / Total Assets (measures the company's
leverage and reliance on debt).
Equity Ratio - (ANSWER)Equity Ratio = Total Shareholders' Equity / Total Assets (measures
how much of the company's assets are financed by shareholders).
International Financial Reporting Standards (IFRS) - (ANSWER)IFRS determines the content of
financial statements and the responsibilities of managers, directors, and auditors for accuracy.
Measurement Rules - (ANSWER)Based on IFRS, these encompass principles, specific rules,
practices, and conventions used by organizations to record transactions and report financial
information.
Impact on Companies - (ANSWER)Companies incur costs for preparing statements, and their
publication has economic consequences, such as changes to share prices, bonuses, and
competitive advantage.
Concerns - (ANSWER)Changes in accounting standards can affect share prices and bonuses tied
to net earnings targets.
Changes in accounting standards - (ANSWER)Can affect share prices and bonuses tied to net
earnings targets.
Financial disclosures - (ANSWER)Managers and owners may worry about revealing trade
secrets through these.
Debates and political lobbying - (ANSWER)Often result in changes in accounting standards
among conflicting interests.
Standards issued - (ANSWER)Typically reflect compromises.
GUARANTEED
INTRODUCTORY FINANCIAL ACCOUNTING
Assets - (ANSWER)Things of value that a company owns or controls and that have future
economic benefit (e.g., cash, accounts receivable, inventory, property, plant, and equipment).
Liabilities - (ANSWER)Obligations or debts the company owes to others. Examples include
Accounts Payable (typically paid within 30 days) and Notes Payable (long-term debts like loans).
Shareholders' Equity - (ANSWER)Represents the owners' interest in the company, including
common shares and retained earnings (profits reinvested in the business rather than paid as
dividends).
Revenue - (ANSWER)What the company earns from sales of goods or services. Any term with
'revenue' in it refers to this (e.g., sales revenue).
Expenses - (ANSWER)Costs incurred to earn revenue, such as salaries, cost of goods sold, and
interest expenses.
Dividends - (ANSWER)Payments made to shareholders from retained earnings, reducing the
amount available to reinvest in the company.
Tangible Assets - (ANSWER)Physical assets that can be touched, like buildings and machinery.
Intangible Assets - (ANSWER)Non-physical assets that have value, like patents and goodwill.
Goodwill - (ANSWER)An intangible asset representing the extra value of a company beyond its
net assets, often from brand reputation and customer relationships.
,Contributed Capital - (ANSWER)Money invested in a company by its shareholders through
purchasing stock.
Retained Earnings - (ANSWER)Profits that a company keeps for reinvestment instead of
distributing as dividends.
Statement of Financial Position (Balance Sheet) - (ANSWER)Reports a company's financial
position at a specific point in time, showing assets, liabilities, and shareholders' equity.
Statement of Earnings (Income Statement) - (ANSWER)Measures the performance of a business
over a specific period of time (e.g., 'for the year ended December 31, 2020').
Net earnings (net income) - (ANSWER)Net earnings = Revenues - Expenses. This is a key
indicator of a company's profitability.
Depreciation - (ANSWER)An expense representing the allocation of the cost of tangible assets
over their useful life, reflecting the usage of long-term assets to generate revenue.
Statement of Changes in Equity - (ANSWER)Shows changes in shareholders' equity over the
accounting period.
Statement of Cash Flows - (ANSWER)Reports the company's ability to generate cash and how it
was used across three main activities: Operating Activities, Investing Activities, and Financing
Activities.
Accrual Accounting - (ANSWER)Financial statements use the accrual accounting method,
meaning that transactions are recorded when they are incurred, not necessarily when cash is
exchanged.
Current Ratio - (ANSWER)Current Ratio = Current Assets / Current Liabilities (measures a
company's liquidity).
, Debt Ratio - (ANSWER)Debt Ratio = Total Liabilities / Total Assets (measures the company's
leverage and reliance on debt).
Equity Ratio - (ANSWER)Equity Ratio = Total Shareholders' Equity / Total Assets (measures
how much of the company's assets are financed by shareholders).
International Financial Reporting Standards (IFRS) - (ANSWER)IFRS determines the content of
financial statements and the responsibilities of managers, directors, and auditors for accuracy.
Measurement Rules - (ANSWER)Based on IFRS, these encompass principles, specific rules,
practices, and conventions used by organizations to record transactions and report financial
information.
Impact on Companies - (ANSWER)Companies incur costs for preparing statements, and their
publication has economic consequences, such as changes to share prices, bonuses, and
competitive advantage.
Concerns - (ANSWER)Changes in accounting standards can affect share prices and bonuses tied
to net earnings targets.
Changes in accounting standards - (ANSWER)Can affect share prices and bonuses tied to net
earnings targets.
Financial disclosures - (ANSWER)Managers and owners may worry about revealing trade
secrets through these.
Debates and political lobbying - (ANSWER)Often result in changes in accounting standards
among conflicting interests.
Standards issued - (ANSWER)Typically reflect compromises.
