Vocab
The area of accounting that focuses on reporting information to internal users.
What is managerial accounting?
What is the equation used in the income statement?
Net Income = Revenue - Expenses
What is the equation used within the balance sheet?
Assets = Liabilities + Owner's Equity
The area of accounting that focuses on reporting information to external users.
What is financial accounting?
An income statement for January is written on January 31st, 2021. How would you write this date in the heading?
For Month Ended January 31, 2021
A balance sheet for November is written on November 30th, 2021. How would you write this date in the heading?
November 30th, 2021
Written records that convey the business activities and the financial performance of a company.
Financial Statements
What is the equation for the net income ratio?
Net Income(Loss) / Total Revenue = Net Income Ratio
How do we calculate owner's equity if there is a net income?
Beginning Capital + Net Income - Drawing = Ending Capital
What are the Big Four accounting firms?
Deloitte, PricewaterhouseCoopers (PwC), Ernst & Young (EY), and Klynveld Peat Marwick Goerdeler (KPMG)
A comparison between two components of financial information.
What is a financial ratio?
What is the equation for the total expenses ratio?
Total Expenses / Total Sales = Total Expense Ratio
The Purple Dog has a net loss in the last period. How would they calculate Owner's Equity?
Beginning Capital - Net Loss - Drawing = Ending Capital
Accounting concept stating that financial statements contain all information necessary to understand a business' financial condition.
What is Full Disclosure?
Reporting an amount on a financial statement as a percentage of another item on the same financial statement.
What is vertical analysis?
Gagson Shoppes has two types of income: Floral Sales and Home/Garden Sales. In which column would they list the balances for these two accounts?
In the details column of the income statement
Total Assets are $4,570 and Owner's Equity is $3,780. How much are Total Liabilities?
$790 ($4,570 - $3,780)
Accounting concept where financial statements are prepared with the expectation that a business will remain in operation indefinitely.
What is Going Concern?