C213- ACCOUNTING FOR DECISION MAKERS (VAC2 TERMS QUESTIONS AND
ANSWERS (VERIFIED ANSWERS)
Net Income
the difference between total revenue and total expenses. If revenues exceed expenses, net
income results.
Net loss
The difference between total revenue and total expenses. If expenses exceed revenues there
will be a net loss.
Notes to financial statements
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.
Operating Activities
Those activities involved in producing and selling goods and services and thus comprise the day-
to-day business of a company
Owner's Equity
portion of the assets that the owners of the organization can really call their own
paid-in capital
The value of the assets given in exchange for shares of stock.
Recognition
The formal acknowledgment and inclusion of an economic event or transaction in the financial
statements.
Relevance
A qualitative characteristic in accounting. Relevance is associated with information that is
timely, useful, has predictive value, and is going to make a difference to a decision maker.
Reliability
A qualitative characteristic in accounting. It is achieved when the information is verifiable,
objective (not subjective) and you can depend on it
Retained Earnings
,Represent the portion pf stockholders' equity (resulting from cumulative profitable operations)
that has not been paid to the owners as dividends
Revenue
The amount of assets created through the performance of business operations
Statement of Cash Flows
Individual cash flow items that are classified according to three main activities: operating,
investing, and financing
Revenue Recognition
the process of recognizing or reporting income as it is earned, essentially matching the revenue
from contracts to the expenses related to generating those sales.
Stockholders' Equity
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
Time Period Concept
The time period principle is the concept that a business should report the financial results of its
activities over a standard time period, which is monthly, quarterly, or annually.
Treasury Stock
Shown as a subtraction in the stockholders' equity section of the balance sheet
"Other Assets"
Long-term assets that are not suitable for reporting under any of the previous classifications
Accounts Payable
The flip side of accounts receivable- when one company on the other side of the transaction is
buying on credit, creating an account payable
Accounts Receivable
Amounts owed to a business by its credit customers and are usually collected in cash within 10
to 60 days.
Accumulated Depreciation
Reflects the wear and tear, or depreciation, of these items since they were originally purchased.
, Accumulated Other Comprehensive Income
The grouped together and reported changes which companies experience increases and
decreases in equity each year because of the movement of market prices or exchange rates
additional paid-in capital
Invested by stockholders that exceeds the par value of the issued shares.
Asset Mix
The proportion of total assets on each asset category, is determined to a large degree by the
industry in which the company operates
Capital Lease Obligations
A long-term liability in the balance sheet.
Cash
Coins and currency as well as the balances in company checking and savings accounts
Common Stock
stockholders' equity investment
Most common current assets...
Cash, inventory and accounts receivable
Intangible assets are recorded....
Only when purchased from another company
"Home-grown" intangibles are....
NOT recorded in the balance sheet
Examples of Intangible Assets
Trademarks, Brand names, Copyrights, Franchises, Goodwill
Unearned Revenue is not revenue at all but a ___________ to be reported in the balance sheet
Liability
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ANSWERS (VERIFIED ANSWERS)
Net Income
the difference between total revenue and total expenses. If revenues exceed expenses, net
income results.
Net loss
The difference between total revenue and total expenses. If expenses exceed revenues there
will be a net loss.
Notes to financial statements
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.
Operating Activities
Those activities involved in producing and selling goods and services and thus comprise the day-
to-day business of a company
Owner's Equity
portion of the assets that the owners of the organization can really call their own
paid-in capital
The value of the assets given in exchange for shares of stock.
Recognition
The formal acknowledgment and inclusion of an economic event or transaction in the financial
statements.
Relevance
A qualitative characteristic in accounting. Relevance is associated with information that is
timely, useful, has predictive value, and is going to make a difference to a decision maker.
Reliability
A qualitative characteristic in accounting. It is achieved when the information is verifiable,
objective (not subjective) and you can depend on it
Retained Earnings
,Represent the portion pf stockholders' equity (resulting from cumulative profitable operations)
that has not been paid to the owners as dividends
Revenue
The amount of assets created through the performance of business operations
Statement of Cash Flows
Individual cash flow items that are classified according to three main activities: operating,
investing, and financing
Revenue Recognition
the process of recognizing or reporting income as it is earned, essentially matching the revenue
from contracts to the expenses related to generating those sales.
Stockholders' Equity
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
Time Period Concept
The time period principle is the concept that a business should report the financial results of its
activities over a standard time period, which is monthly, quarterly, or annually.
Treasury Stock
Shown as a subtraction in the stockholders' equity section of the balance sheet
"Other Assets"
Long-term assets that are not suitable for reporting under any of the previous classifications
Accounts Payable
The flip side of accounts receivable- when one company on the other side of the transaction is
buying on credit, creating an account payable
Accounts Receivable
Amounts owed to a business by its credit customers and are usually collected in cash within 10
to 60 days.
Accumulated Depreciation
Reflects the wear and tear, or depreciation, of these items since they were originally purchased.
, Accumulated Other Comprehensive Income
The grouped together and reported changes which companies experience increases and
decreases in equity each year because of the movement of market prices or exchange rates
additional paid-in capital
Invested by stockholders that exceeds the par value of the issued shares.
Asset Mix
The proportion of total assets on each asset category, is determined to a large degree by the
industry in which the company operates
Capital Lease Obligations
A long-term liability in the balance sheet.
Cash
Coins and currency as well as the balances in company checking and savings accounts
Common Stock
stockholders' equity investment
Most common current assets...
Cash, inventory and accounts receivable
Intangible assets are recorded....
Only when purchased from another company
"Home-grown" intangibles are....
NOT recorded in the balance sheet
Examples of Intangible Assets
Trademarks, Brand names, Copyrights, Franchises, Goodwill
Unearned Revenue is not revenue at all but a ___________ to be reported in the balance sheet
Liability
We have an expert-written solution to this problem!
