Financial Accounting
Corporate Financial Statements
Recording Accounting Transactions
Accrual Accounting and Adjusting Entries
Statement of Cash Flows
100
The process of identifying, measuring, and communicating economic information to permit informed judgments and decisions.
What is accounting?
100
Sole proprietorships (where there is one owner), partnership (where ownership is spread over two or more people) and corporations (where ownership is spread over investors).
What are the three main forms of business?
100
Any economic event that affects a company's asset, liability, or equity at the time of the event.
What is an accounting transaction?
100
These entries are made at the end of the accounting period to record previously unrecorded revenues or expenses.
What are adjusting journal entries?
100
Operating, investing and financing.
What are the three sections found on the statement of cash flows?
200
When they are earned: when services are rendered or goods delivered to a customer.
When are revenues recognized?
200
Generally Accepted Accounting Principles which are those accounting standards, terms, methods, principles, etc. that have been accepted and used over time by the accounting profession.
What is GAAP?
200
Assets = Liabilities + Equity
What is the fundamental accounting equation (or balance sheet identity)?
200
When payment is received from a customer before providing goods or services.
What is a deferred revenue?
200
A comparative balance sheet, an income statement and additional information on changes in account balances.
What are the three sections on the statement of cash flows?
300
One is equity contributed by owners and the other is the difference between total assets and total liabilities and represents the share of assets owned by the owners.
What is the difference between contributed capital and equity.
300
One refers to tangible resources that are used in a company's operations for more than one year and are not intended for resale. The other are also used for more than one year and are not intended for resale, but have no physical substance.
What is the difference between a fixed asset and an intangible asset?
300
Assets: Debit Liabilities: Credit Equity: Credit Revenues: Credit Expenses: Debit Dividends: Debit
What are the normal account balances for each account type?
300
Deferred revenue, accrued revenue, deferred expense and accrued expense.
What are the four basic classifications of adjusting entries?
300
The direct method and the indirect method.
What are the two methods for reporting operating cash flows?
400
Through the statement of retained earnings because it uses net income (or loss) from the income statement to determine ending retained earnings, which appears on the balance sheet.
How are the balance sheet and income statement linked?
400
Gross margin, operating profit (EBIT), income before taxes (EBT) and net income.
What are the various subtotals of income on a multi-step income statement?
400
A collection of accounts and their balances whose input comes from the journal.
What is a ledger?
400
Accounts that are closed (zeroed out) at the end of the accounting period.
What are temporary accounts?
400
The cash a company generates in excess of its investments in productive capacity and payments to stockholders (dividends).
What is free cash flow?
500
One means that the accounting information has the capacity to affect decisions and the other describes the specific threshold over which an item could begin to affect decisions.
How are relevance and materiality related?
500
One shows the growth or decline in each account, but it does not explain the reason for the change. The other shows how various balances relate to a larger base amount.
How is horizontal analysis different from vertical analysis?
500
The process of copying and transferring information from the journal to the ledger.
What is "posting"?
500
1) a debit to all revenue accounts and a credit to Retained Earnings. 2) a debit to Retained Earnings and a credit to all expense accounts. 3) a debit to Retained Earnings and a credit to Dividends.
What are the three possible closing entries?
500
A comparison of free cash flow to the average amount of debt maturing in the next five years.
What is the cash flow adequacy ratio?
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