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21 Cards in this Set
- Front
- Back
Financial Accounting
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provides info for decision makers outside the entity, such as investors , creditors, government agencies, and the public (we focus more on this than Management accounting)
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Management accounting
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provides info for managers of RadioShack. ex. includes budgets, forecasts, and projections that are used in making strategic decisions of the entity
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Proprietorship
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single owner. business records should not include the proprietor's personal finances
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Partnership
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has two ore more parties as co-owners, and each owner is a partner.
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Limited-Liability Company
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one in which the business is liable for the company's debts. owners are called members
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Corporation
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business owned by the stockholders, or shareholders. who own stock representing of ownership in the corporation
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board of directors
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sets policy and appoints officers in a corporation. CEO (chief executive officer) is the one who has the most power. COO (chief operating officer) president
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Generally Accepted Accounting Principles (GAAP)
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accountants follow professional guidelines for measurement and disclosure of financial info. The Financial Accounting Standards Board(FASB) formulates GAAP
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International Accounting Standards Board (IASB)
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sets global- or international--Financial Reporting Standards (IFRS)
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GAAP assumptions & principles
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Entity assumption (a business is a separate economic unit. Continuity (going-concern) assumption (business will continue to exist). Historical cost principle (assets recorded at purchase). Stable Monetary unit assumption (no hyperinflation)
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The Accounting Equation
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Assets= Liabilities+ Owners Equity
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Assets
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Economic resource that provides a future benefit
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Liabilities and examples of it
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Outsiders claims to assets
Accounts payable- liability for goods or services . Notes Payable- written to pay on certain date. |
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Owners Equity
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Owners claims to assets. a corporation equity is called stockholders equity
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Stockholders Equity (assets- Liabilities= Owners Equity)
and examples of it |
Paid-in capital (amount invested by stockholders, common stock)
Retained earnings (amounts earned and kept for use in the company) (increased by revenues, Decreased by expenses) |
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Net income
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Revenues (earned by selling goods or services)
Expenses (costs of doing business, eg. rent and utilities) Revenues - expenses = net income |
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Dividends
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Distributions of assets (usually cash) to shareholders
Decrease Retained Earnings Do not impact net income |
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Financial Statements
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A vehicle to report the results of a business to public
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Income Statement (most important in this country)
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Measures operating performance for a period. what have you done for me lately (basically what its saying) Reports revenue and expenses and the resulting net income (or loss)
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Balance Sheet
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measures financial position as of a certain date. reports assets, liabilities, and shareholders equity. assets and liabilities are categorized as current (cash, accounts receiveable, and inventory) and long-term(property, plant, and equipment)
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Cash Flow Categories
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Operating- cash generated from day to day business activities, and related to selling goods and services to customers
Investing- related to purchasing and selling long-term assets Financing- how a company obtains resources to finance business, and related to long-term debt and equity (issuing stock) |