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33 Cards in this Set
- Front
- Back
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Financial accounting |
The primary focus of financial accounting is on the information needs of investors and creditors.the |
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The financial statements most frequently provided are… |
Balance sheet Income statement Statement of cash flows Statement of shareholders equityt |
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3 primary forms of business organizations |
Sole proprietorship Partnership Corporation |
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Net operating cash flow |
Net operating cash flow is the difference between cash receipts and cash disbursements from providing goods and services. |
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Net income |
Net income is the difference between revenues and expenses. Revenue-expenses = net income |
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GAAP |
Is a dynamic set set of both broad and specific guidelines that companies should follow when measuring and reporting the information in their financial statements and related notes |
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Financial Accounting Standards Board (FASB) |
The FASB was established to set U.S. accounting standards. |
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Accounting Standard Setting |
Back (Definition) |
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Relevance |
Predictive value Confirmatory value Materiality |
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Relevance |
Predictive value Confirmatory value Materiality |
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Faithful representation |
Completeness Neutrality Free from error |
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Hierarchy of Qualitative Characteristics of financial information |
Back (Definition) |
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Enhancing qualitative characteristics |
Comparability Verifiability Timeliness Understandability |
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The qualitative characteristic that means there is an agreement between a measure, and a real world phenomenon is |
Representational faithfulness |
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Relevance requires that information possess predictive, and / or |
Confirmatory value |
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The two primary decision specific qualities that make accounting information useful are |
Relevance and faithful representation |
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The primary objective of financial reporting is to provide information |
That is useful in decision making |
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Financial statements generally include all of the following, except |
Federal income tax return |
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Going concern |
The underlying assumption that presumes a company will continue indefinitely |
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Periodicity |
The underlying assumption that assumes that the life of a company can be divided into artificial time periods |
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Revenue typically should not be recognized until |
The seller has transferred goods or services to a customer |
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Journal |
A chronological record of all economic events affecting a firm |
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The reason we post journal entries is to |
Reflect the information in journal entries in ledger accounts |
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Current ratio |
Total current assets / total current liabilities |
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Working capital |
Total current assets - total current liabilities |
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Acid test ratio |
(Total current assets - Inventory - Prepaid expenses) / Total current liabilities |
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Debt to equity ratio |
Total Liabilities / Total Shareholder’s equity |
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Quick acid total |
Total current assets - inventory - prepaid expenses |
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Restricting cause typically can be defined as |
Cost associated with management plan to materially, change the scope of business operations, or the manner in which they are conducted |
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Operating cash flows would NOT include |
Dividends paid |
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Cash flows from investing activities include |
Payment for the purchase of equipment Proceeds from the sale of Marketable securities Cash outflows from acquiring land |
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In a period when costs are rising, and inventory quantities are stable the inventory method that would result in the highest any inventory is |
FIFO |
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The capitalized cost of land excludes |
Property taxes for the first year owned |
