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41 Cards in this Set

  • Front
  • Back
statement of cash flows
*3parts
+/- from operating activities, investing activities, from financing activities
primary objective of external financial reporting
to provide useful economic info about a business to help external parties make sound financial decisions
current ratio=
current assets/current liabilities
3 basic assumptions
1. separate-entity assumption
2. unit-of-measure assumption
3. continuity assumption
separate-entity assumption
business transactions are separate from the transactions of the owners
unit-of-measure assumption
accounting info should be measured and reported in the national monetary unit
continuity assumption
(going-concern assumption) businesses are assumed to continue to operate into foreseeble future
order of liquidity
how soon an asset is to be turned into cash or used
order of maturity
how soon an obligation is to be paid
expenditures
any outflow of $ for any purpose
4 conditions for the Revenue Principle
1. delivery has occurred or services have been rendered
2. there is persuasive evidence of an arrangement for customer payment
3. the price is fixed or determinable
4. collection is reasonably assured
net profit margin=
net income/net sales
Balance Sheet- current assets
*2parts
(accruals)
Accruals
-interest receivable
-rent receivable
Balance Sheet- current assets
*2 parts
(deferrals)
Deferrals
-inventory
-prepaid expenses
Balance Sheet- noncurrent assets
*2parts
(deferrals)
Deferrals
-property and equipment
-intangibles
Balance sheet- current liabilities
*4parts
(accruals)
accruals
-interest payable
-wages payable
-utilities payable
-income tax payable
balance sheet- current liabilities
*1part
(deferral)
deferral
-unearned revenue
deferred expense
pay/buy assent NOW and expense it over time
deferred revenue
received money upfrontt BEFORE we have a chance to earn it
accrued expense
incur expense BEFORE we pay for it
accrued revenue
earn revenues BEFORE we get the money
matching principle(asset)
prepaid expense- cash paid before service
matching principle(liab)
account payable- cash not paid by time goods are used or services provided
revenue recognition principle (asset)
account receivable- cash not collegcted by the time goods received or delivered
revenue recognition principle (liab)
unearned revenue- cash collected before goods received or service provided
collected cash
Dr
pay cash
Cr
A/R or A/P
Cr.
somethings gets used up
*2parts
dr. expense
cr. thing
purchase something
dr. thing
received payment
dr
made payment
cr.
accumulated depriciation
*2parts
contra asset, cr.
accrued revenue
*2parts
asset(balance sheet), revenue (income statement)
unexpired amounts
make acc. for difference
asset
dr
expense
dr
dividends
dr
liab
cr
revenue
cr
s/e
cr