Financial Reports
This financial report shows a company's revenues and expenses over a specific period.
What is an Income statement
Assets = $22000
Liabilities = $12000
OE = ?
10000
expenses should be recorded in the same period as the revenues they help generate.
Accrual
a present economic resource controlled by the entity (as a result of past events) that has the potential to produce future economic benefits
What is an asset
Net profit / Average assets
What is Return on Assets
Written on the left hand side of the balance sheet
What is an asset
When might cash at bank be a liability
What is an overdraft
the records of assets, liabilities and business activities of the entity are kept completely separate from those of the owner of the entity as well as from those of other entities
What is the entity assumption
a reduction in liabilities that leads to an increase in owner’s equity.
What is Revenue
Return on owners equity
Net profit / Owners equity
This report provides all cash flows during a reporting period, classified as Operating, and Financing activities
What is a Cash Flow statement
State the effect on the accounting equation. The owner takes home a $400 printer for personal use.
Asset decrease by $400
Liabilities No effect
Owners equity decreases by $400
the assumption that reports are prepared for a particular period of time, such as a month or a year, in order to obtain comparability of results
What is the period assumption
an increase in liabilities that reduces owner’s equity
What is an expense
Net profit / revenue
What is Net profit margin
an Accounting report that details a firm’s financial position at a particular point in time by reporting its assets, liabilities and owner’s equity
What is a balance sheet
How would a machine used for producing a companies product be classified?
What is a non-current asset
ensures that different, knowledgeable and independent observers can reach the same conclusion that a particular representation of an event is faithfully represented
What is the qualitative characteristic of verifiability
a present obligation of the entity (as a result of past events) to transfer an economic resource
What is a liability
Gross profit / net sales
Gross Profit Margin
The first category found on the cash flow statement
What are cash flow from operations
State the effect on the accounting equation.
Sale of inventory for $400 + GST. Cost of goods sold $200
Assets increase by $240
Liabilities increase by $40
OE increases by $200
the cost of the asset when purchased
What is historical cost?
the residual interest in the assets of a company after deducting liabilities
What is equity
Inventory turnover
Cost of goods sold / average inventory