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