Operating Activities
These are day-to-day business actions like selling goods or paying employees that determine net income
Operating Activities
Transactions involving long-term assets, such as buying machinery or selling land
Investing Activities
Coins, currency, checks, and money orders that a bank accepts for deposit
Cash
A separate legal entity where ownership is divided into transferable shares of stock
Corporation
The fundamental equation that must always balance: Assets = Liabilities + [This]
Stockholders' Equity
Under the indirect method, we adjust Net Income because it includes these types of non-cash items
Accruals and Non-cash expenses
Transactions involving debt or equity, such as issuing stock or paying dividends.
Financing Activities
Short-term, highly liquid investments like Treasury bills
Cash Equivalents
The document filed with the state that acts as the corporate charter.
Articles of Incorporation
The "Golden Rule" of double-entry accounting states that for every transaction, total Debits must equal total
Credits
Cash from customers is included in this section, but buying equipment is not
Operating Activities
Issuing bonds for cash is this type of activity, while using cash to buy securities is the other
Financing vs. Investing
This accounting method records revenue when earned, not just when cash changes hands
Accrual Basis
"Authorized" is the max allowed, "Issued" is what is sold, and this term refers to shares currently held by investors.
Outstanding Stock?
The standard set of rules and guidelines used for financial reporting in the United States (the acronym)
GAAP
The net cash flow if Net Income is $\$50,000$, Depreciation is $+\$8,000$, A/R increases by $\$4,000$, and Inventory decreases by $\$3,000$
$57,000
The gain reported when equipment costing $50,000 with $40,000 depreciation is sold for $12,000
$2,000 Gain
Cash receipts from customers are an example of an inflow, while payments to suppliers are an outflow
Cash Flows
This group is elected by stockholders to hire the CEO and approve major strategies
Board of Directors
This principle dictates that expenses should be recorded in the same time period as the revenues they helped generate
Matching Principle
We subtract gains on the sale of equipment from Net Income in this section for this specific reason
What is to remove non-cash effects
A corporation can only pay these if they have enough Retained Earnings and cash on hand
Cash Dividends
Companies often skip the FASB-recommended Direct Method in favor of the Indirect Method for this reason
Simplicity
This stock type gets priority for dividends, while Common Stock has voting rights.
Preferred Stock
The specific order in which financial statements must be prepared (start with Income Statement, end with Balance Sheet)
Income Statement
Statement of Retained Earnings
Balance Sheet
Statement of Cash Flows