Snapshots
The financial statement that shows assets, liabilities and owners equity.
What is a Balance Sheet?
The financial statement that summarizes the revenue & expenses of a company over a defined period of time.
What is an Income Statement?
The method of accounting that records revenue and expenses as they occur. (when you earn, owe or use it)
What is the Accrual Method?
Materials used to produce your product.
What is inventory?
An expense you pay in advance before receiving the benefit.
What is a prepaid expense?
What you have.
What is an Asset?
Recorded on the Income statement but not on the Balance sheet. (name at least 2)
What are sales, expenses & COGS?
The method of valuing inventory that resembles putting inventory into a barrel.
FIFO (First in First Out)
The cost of making your product.
What is Cost of Good Sold (COGS)?
Reduces Cash and increases Inventory but is not the purchase of a raw material.
What is labor costs?
Who owns what you have.
What are liabilities & owners equity?
Net Profit or Bottom Line
What is Gross Profit less Expenses?
What are service businesses? (doctors, lawyers, accountants, real estate companies, cleaning services)
The cost of lemons increases and you are using LIFO for valuing your inventory. Which lemons will you use to make your lemonade?
What are the first lemons I bought?
Reporting to the government on the Cash Method of accounting and keeping your books on the Accrual Method of accounting.
What is creative accounting?
Two types of liabilities
What are notes payable and accounts payable?
Sales - COGS
What is Gross Profit (fat profit)?
The method of accounting that delays/reduces tax liability? (you will owe less taxes)
What is the Cash Method of accounting?
You buy lemons on credit. Where you will account for this on the Balance Sheet? And in what account?
What is Liabilities and Notes Payable?
Investors want to see this as high but to lower your taxes you want this to be low.
What is Net Profit?
Fundamental accounting equation which keeps the Balance Sheet in balance.
Asset = Liabilities - Owners Equity
The length of time used in an specific Income statement.
What is an Accounting Period?
The method of valuing inventory that delay's/reduces your tax liability. (you won't owe as much tax if you use this method)
What is LIFO?
You sell your product but don't make a profit. How did you sell it? (two possible answers)
What is selling at cost, what is bad debt sale?
The financial tool used to record moment by moment everything that happens.
What is the General Ledger?