1. Accounting
    A system that collects and processes financial information about an organization and reports that information to decision makers.
  2. Accounting Entity
    The organization for which financial data are to be collected.
  3. Accounting period
    The time period covered by the financial statements.
  4. Audit
    An examination of the financial reports to ensure that they represent what they claim and conform with generally accepted accounting principles.
  5. Balance sheet
    Reports the amount of assets, liabilities, and stockholders' equity of an accounting entity at a point in time.
  6. Basic Accounting Equation
    Assets = Liabilities + Stockholders' Equity
  7. Financial Accounting Standards Board (FASB)
    The private sector body given the primary responsiblilty to work out the detailed rules that become generally accepted accounting principles.
  8. Generally Accepted Accounting Principles (GAAP)
    The measurement rules used to develop the information in financial statements.
  9. Income Statement
    Reports the revenues less the expenses of the accounting period.
  10. Notes
    Provide supplemental information about the financial condition of a company, without which the financial statements cannot be fully understood.
  11. Public Company Accounting Oversight Board (PCAOB)
    The private sector body given the primary responsibility to work out detailed auditing standards.
  12. Securities and Exchange Commission (SEC)
    The US gov't agency that determines the financial statements that public companies must provide to stockholders and the measurement rules that they must use in producing those statements.
  13. Statements of Cash Flows
    Reports inflows and outflows of cash during the accounting period in the categories of operating, investing, and financing.
  14. Statement of Retained Earnings
    Reports the way that net income and the distribution of dividends affected the financial position of the company during the accounting period.
  15. Balance Sheet Structure
    Assets = Liabilities + Stockholders' Equity
  16. Income Statement Structure
    Revenues - Expenses = Net Income
  17. Statement of Retained Earnings Structure
    Beginning Retained Earnings + Net Income - Dividends = Ending Retained Earnings
  18. Statement of Cash Flows Structure
    • +/- Cashflow from Operations
    • +/- Cashflow from Investment
    • +/- Cashflow from Financing
    • = Change in Cash
  19. What are Assets & give examples
    • Assets are economic resources owned by the entity. Also includes money owed to the entity that hasn't been received yet.
    • Examples: Cash, inventory, buildings, equipment, vehicles, accounts receivable.
  20. What are Liabilities & give examples
    • They are the company's debts or obligations.
    • Examples: Accounts payable, Notes payable, loans that haven't been payed off.
  21. What's Stockholders' Equity & examples
    • It is the financing provided by the owners and the earnings of the business.
    • examples: contributed capital, retained earnings
  22. When are revenues recorded/reported?
    When the goods or services have been sold & given to the customer, whether or not they have been fully paid for yet.
Card Set
Financial Accounting Chapter 1