Financial Accounting Flashcards

FINANCIAL ACCOUNTING Accounting - ANS-the information system that measures business activities, processes that information into reports and financial statements and communicates the results to decisions makers Accounting Equation - ANS-Assets = Liabilities + Owner's Equity Asset - ANS-an economic resource that is expected to be of benefit in the future Balance Sheet - ANS-List of an entity's assets liabilities and owners equity as of a specific date. also called the statement of financial position Board of directors - ANS-Group selected by the stockholders to set policy for a corporation and to appoint its officers capital - ANS-Another name for the owners equity of a business Common Stock - ANS-The most basic form of capital stock Continuity assumption - ANS-the entity will continue to operate long enough to use existing assets (land buildings equipment and supplies) Corporation - ANS-a business owned by stockholders. A corporation is a legal entity, an artificial person in the eyes of the law Current Assets - ANS-An asset that is expected to be converted to cash, sold, or consumed during the next 12 months, or within the business's normal operating cycle if longer than a year Current Liability - ANS-A debt due to be paid within one year or within the entity's operating cycle if the cycle is longer than a year Deficit - ANS-Negative balance in retained earnings caused by a net loss over a period of years Dividends - ANS-Distributions (usually cash) by a corporation to its stockholders Entity - ANS-An organization or a section of an organization that, for accounting purposes, stand apart from other organizations and individual as a separate economic unit Ethics - ANS-Standards of right and wrong that transcend economic and legal boundaries. Ethical standards deal with the way we treat others and restrain our own action because of the desires, expectations, or rights of others or because of our obligations to them Expenses - ANS-Decrease in retained earnings that results from operations; the cost of doing business; opposite of revenues Fair value - ANS-the amount that a business could sell an asset for, or the amount that a business could pay to settle liability Financial accounting - ANS-The branch of accounting that provides information to people outside the firm Financial statements - ANS-Business documents that report financial information about a business entity to decision makers Financing activities - ANS-Activities that obtain from investors and creditors that cash needed to launch and sustain the business a section of the statements of cash flow Generally Accepted Accounting Principles - ANS-Accounting guidelines formulated by the financial accounting standards board that govern how accounting is practiced going concern assumption - ANS-holds that the entity will remain in operations for the foreseeable future Historical cost principle - ANS-Principle that states that assets and services should be recorded at their actual cost income statement - ANS-A financial statement listing an entity's revenues, expenses, and net income or net loss for a specific period. Also the statement of operations International Financial Reporting Standards - ANS-Accounting guidelines, formulated by the International Accounting Standards Board (IASB).U.S companies are expected to adopt these principles for their financial statements so that they can be compared with those of companies from other countries Investing Activities - ANS-Activities that increase or decrease the long-term assets available to the business, a section of the statement of cash flow Liability - ANS-An economic obligation (a debt) payable to an individual or an organization outside the business limited liability company - ANS-A business organization in which the business (not the owner) is liable for the company's debts Long-term debt - ANS-A liability that falls due beyond one year from the date of the financial statements management accounting - ANS-The branch of accounting that generates information for the internal decisions makers of a business such as top executives net income, net earnings,net profit - ANS-Excess of total revenues over total