Income Statement
This occurs when expenses exceed revenues.
Net Loss
What is the accounting equation?
Assets = Liabilities + Owner's Equity
What is the cash flow equation?
Cash Inflow - Cash Outflow = Net Cash
This is property and other items of value owned by a business.
Assets
What are costs of good sold?
The cost of component parts of what it takes to make whatever a business sells.
This occurs when revenues exceed expenses.
Net profit
What are the 3 components of a balance sheet?
Assets, Liabilities, Owner's Equity
What are the 3 main components of a cash flow statement?
Operating, Investing, Financing
What is the systematic process of recording and reporting the financial position of a business?
Accounting
What side of the accounting equation do wages appear on?
Right
Examples of these include: insurance, payroll, utility bills, and rent.
Operating Expenses
What is the difference between fixed and current assets?
Current: Converted to cash within a year
Fixed: Lasts more than 1 year
What is a cash flow statment?
a financial document that shows the cash inflows and outflows of the company during the period.
Which financial statement applies the accounting equation?
Balance Sheet
This represents the short-term liabilities that a business owes to creditors.
Accounts Payable
The amount of money that a company receives during a specific period of time.
Revenue
List 3 examples of a liability.
Loans, Accounts Payable, Wages Payable, Taxes Payable, Mortgage,
Cash outflow
Which financial statement shows how changes in balance sheet accounts and income affect cash and cash equivalents?
Cash Flow Statement
What is the “bottom line” on an income statement?
The final step; net profit/loss
What are the 3 steps to an income statement?
Step 1: Revenue - COGS = Gross Profit
Step 2: Gross Profit - Operating Expenses = Operating Profit
Step 3: Operating Profit - Taxes = Net Profit/Loss
What is the total amount of money owed to a business?
Accounts receivable
What is an example of an operating transaction?
Cash received from customers.
The set of accounting rules used by accountants to prepare reports:
GAAP
True or False: A Balance sheet provides a full picture of a companies financial health.
False