Chapter 1
The 2 types of users of financial statements
what is internal and external?
Economic events that require recording in the statements
what are transaction?
Net profit margin
what is income over revenues?
2 types of adjusting entries
what are deferrals and accruals?
deferrals
deferred supplies, deferred prepaid, deferred depreciation, deferred revenue
Finance, management , marketing, Human Resources
what are examples of internal users of financial statements?
Current liabilities
what are payables and deferred revenue?
Dividing the company’s long life into shorter chunks of time
what is time period assumption?
Plants, property and equipment
what are life long assets that we depreciate?
Accruals
accrued revenue, accrued interest, accrued wages, accrued interest
the 3 entity types
what is sole proprietorship, partnership, and corporatio?
The 4th step of the accounting cycle
what is prepare trial balance?
Cash basis accounting
records revenues when cash is received and expenses when cash is paid
Why do we need adjustment?
to ensure that we properly state assets, liabilities, revenues and expenses at appropriate amounts.
The only planet in our solar system that rotates clockwise
what is Venus?
Income statement -> statement of retained earnings-> balance sheet-> statement of cash flow
what is the order in which financial statements are recorded?
The current ratio
what is current assets over current Liabilities
Accrual basis accounting
doesnt matter when cash is received/paid
Difference between permanent and temporary accounts
temporary-all revenue accounts, all expense accounts, dividends
permanent-all asset accounts, all liability accounts, stockholder’s equity accounts
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what is destiny’s child?
Full accounting equation
assets = liabilities + SHE
5 steps of the accounting cycle
1. Analyze 2. Record 3. Summarize 4. Prepare trial balance 5. Report financial statements
what are the income statement transaction?
1. Analyze 2. Record 3. Summarize 4. Prepare unadjusted trial balance 5. Prepare income statements
post closing trial balance
all temporary accounts are zero. ONLY permanent accounts
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what are Kim kardashian’s children’s names.