Accounting - Chapter 1

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  1. Accounting Equation
    Assets = Liability + Owner's Equity
  2. Balance sheet
    List of an entity's assets, liabilities, and owner's equity as of a specific date.  Also called the statement of financial position.
  3. Current Liability
    A debt due to paid within one year or within the entity's operating cycle if the cycle is longer than a year.
  4. Fair value
    The amount that a business could sell an asset for, or the amount that a business could pay to settle a liability.
  5. Financial statements
    Business documents that report financial information about a business entity to decision makers.
  6. Expenses
    Decrease in retained earnings that results from operations; the cost of doing business; opposite of revenues.
  7. Financing activities
    Activities that obtain from investors and creditors the cash needed to launch and sustain the business; a section of the statement of cash flows.
  8. Historical cost principle
    Principle that states that assets and services should be recorded at their actual cost.
  9. Income statement
    A financial statement listing an entity's revenues, expenses, and net income or net loss for a specific period. Also called the statement of operations.
  10. (IFRS) International Financial Reporting Standards
    Accounting guidelines, formulated by the International Accounting Standards Board (IASB).
  11. Operating Activites
    Activities that create revenue or expense in the entity's major line of business; a section of the statement of cash flows. Operating activities affect the income statement.
  12. Retained earnings
    The amount of stockholders' equity that the corporation has earned through profitable operation and has not given back to stockholders.
  13. Revenues
    Increase in retained earnings from delivering goods or services to customers or clients.
  14. Investing activities
    Activities that increase or decrease the long-term assets available to the business; a section of the statement of cash flows.
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Accounting - Chapter 1
Chapter 1
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