Assets
Economic resources that the company owns or controls from past transactions/events that it expects to help generate future benefits
What is an asset
The amount of money invested by the owner in the business minus any money taken out by the owner of the business
What is owner's equity?
If a balance sheet is labeled as classified what does that mean?
Current and non-current items are listed separately
Cash and cash equivalents, Accounts receivable, and Inventories, are examples of what type of account asset account?
What are current assets?
Obligations that a company does not reasonably expect to liquidate within a normal operating cycle, all covenants and restrictions must be disclosed
What are long-term liabilities?
The statement of financial position and the statement of financial condition are also known as this
What is a balance sheet?
What determines if a long term investment like a marketable security is classified as current or non current?
What is management's intent?
Liability + Owner's Equity = ?
What are assets?
The standard by which financial statements must be prepared.
What is US GAAP? (For international companies, IFRS standards are used to generate financial statements)
What are the Asset accounts and amounts associated with the below transactions? Distinguish between current and non-current where applicable.
For the year ended Dec. 31 2021, three investments need to be added into the balance sheet, they are as follows:
-Company A has a marketable security it intends to sell in the next 12 months, the fair value at the Balance sheet date is $120,000.
-Note Receivable dated March 31. 2022 with a fair value $50,000 at Balance sheet date.
-Available for sale debt security with a fair value of $250,000 at Balance sheet date, no intention to sell in the next 12 months.
Current Assets
Note Receivable $50,000
Investments $120,000
Non-Current Assets
Investments $250,000
For the year ended Dec. 31 2021, the below transactions need to be recorded
Company A purchased inventory worth $80,000, all on account.
Company A has a Note payable dated 2023 with a fair value of $125,000 at balance sheet date
On Dec 31. 2021 the Company owed employees wages of $75,000
Current Liabilities
AP $80,000
Wages Payable $75,000
NonCurrent Liabilities
Note Payable $125,000
What is the purpose of each of the following statements; Income Statement, Statement of consolidated cash flows, Balance Sheet?
-Income Statement: To determine the profitability of the company, credit worthiness. The income statement reports a company’s revenues, expenses, gains, and losses.
-Statement of cash flows: details the cash inflows and outflows by category. Shows how the company generated cash and what the company is spending the cash on.
-Balance Sheet: shows the assets and the claims to those assets (liabilities) and the residual amount is shown as equity. Used to assess financial risk.
What are the Asset accounts and amounts associated with the below transactions? Distinguish between current and non-current where applicable.
Sold Inventory worth $100,000, $80,000 was sold on account and $20,000 for cash. Company A bought new equipment worth $250,000 at the beginning of the year, depreciation is calculated using a straight-line method over 10 yrs.
Current Assets
Cash $20,000
AR $80,000
NonCurrent Assets
Equipment (net) $225,000
What are the Liability and Equity accounts and amounts associated with the transactions below? Distinguish between current and non-current where applicable
Company A issued 50,000 shares at $1 par value for $150,000.
Company A paid dividends of $15,000
Stockholders equity
Common Stock $50,000
APIC. $100,000
Retained earnings ($15,000)
What type of activities is the statement of cash flows split into? What makes an activity fall into each of the categories?
Operating activities, cash flows that relate to net income, or daily/central operations of the company.
Investing activities, cash flows that are separate from the daily/central operations of the company and involve a non-current asset.
Financing activities, cash flows that are separate from the daily/central operations of the company but relate to either a liability or equity.