Characteristics of Financial Statements
The principle of financial reporting that emphasizes clarity and conciseness in presentations, with detailed explanations relegated to supportive footnotes.
Understandability
The result if the revenue is larger than expense.
Net Income
The two types of internal users
Owners and Management
The 3 main accounting elements
Assets, Liabilities, and Owner's Equity
The process of accumulating, organizing, storing, and accessing the financial information base of an entity, which is needed for basic purposes.
Bookkeeping
This key principle ensures financial statements accurately represent an entity's financial position and performance, requiring faithful representation, completeness, and freedom from material error.
Component of the capital statement that includes the final calculation of the capital balance at the end of the period
Capital Balance
The systematic process of reporting financial transactions of a business.
Accounting
The foundation of double-entry bookkeeping
Accounting Equation
The accounting principle that separates the financial activities of a business from the personal finances of its owners.
Business Entity Concept
Claims by creditors to the assets of a business until they are paid.
Liabilities
The type of Business that engages in selling tangible products.
Merchandising Business
Tangible assets that aren't expected to be used in the upcoming fiscal year.
Non-current/Fixed Assets
Every transaction is recorded in a ____ as a debit entry in one account and as a credit entry in another account.
Formal Journal
The accounting principle that ensures expenses are recorded alongside related revenues in the same period, preventing misrepresentation of costs across accounting periods.
Matching Principle
It is a financial report that shows the financial condition and operating results of the business.
Financial Statements
The type of Business that utilizes raw materials to produce new products.
Manufacturing Business
Amounts earned representing the time value of money derived from loans or from promissory notes received by a business.
Interest Income
the type of accounting system that requires every transaction to be recorded in at least two places (or two accounts) using a debit and a credit.
Double-entry Bookkeeping
The accounting principle prioritizes consistent methods and procedures to enable comparisons across companies and within a company over time.
Comparable
This kind of financial statement calculates the owner's capital balance by using the owner's drawings from the ledger and the net income/loss from the income statement.
Capital Statement
The type of business that primarily offer intangible products.
Service Business
The amount the owner withdraws from his business for living and personal expenses.
If a company keeps accurate records, the accounting equation will always be _______________________________________________________ meaning the left side should always equal the right side
In Balance