Accounting Chapter 1

Front 1

What are the four types of accounting?

Back 1

Financial, management, tax, auditing

Front 2

In this type of accounting one records, classifies, summarizes, interprets, and communicates financial information about businesses

Back 2

Financial accounting

Front 3

This type of accounting is used with an organization and is usually confidential and accessible only to small groups of decision makers

Back 3

management accounting

Front 4

This type of accounting is external or internal; in external there is an independent examination of an organization's financial statements and accounting records in order to express an opinion as to the truth and fairness of the statements where in an internal it provides info for management's use

Back 4

auditing accounting

Front 5

What are the big four accounting firms?

Back 5

1. Deloitte
2. Ernst and Young
3. KPMG
4. Pricewaterhouse Coopers

Front 6

This kind of business is owned by one person
-simple to establish
-owner controlled
-tax advantages
-owner personally liable
-financially difficult

Back 6

sole proprietorship

Front 7

This type of business has two or more owners
- simple to establish
-shared control
-broader skills and resources
-tax advantages
-personal liability

Back 7

Partnership

Front 8

This type of business has separate legal entity owned by stockholders
-easy to transfer ownership
-greater capital raising potential
-lower legal liability
-unfavorable tax treatment

Back 8

corporation

Front 9

This user of financial information is one that plans, organizes, and runs a business. examples: marketing managers, production supervisors, finance directors, company officers

Back 9

internal accounting

Front 10

This user of financial information is usually an investor or creditor

Back 10

external accounting

Front 11

What are the three types of business activity?

Back 11

financing, investing, operating

Front 12

amount owed to creditor; notes payable, bonds payable

Back 12

liability

Front 13

total amount paid in by stockholders for the shares they purchase

Back 13

common stock

Front 14

payments to stockholders; not included in expenses

Back 14

dividends

Front 15

resources owned by a business; types include: PPE, cash

Back 15

assets

Front 16

Borrowing and selling stock are part of this business activity

Back 16

financing activity

Front 17

Obtaining resources or assets to operate the business is classified under this business activity

Back 17

investing activity

Front 18

the increase in assets resulting from the sale of a product or service in the normal course of business

Back 18

revenue

Front 19

goods available fro future sales to customers are assets called...

Back 19

inventory

Front 20

classified under assets, this term means "the right to receive money in the future, kind of like a loan"

Back 20

accounts receivable

Front 21

cost of assets consumed or services used in generating revenue

Back 21

expenses

Front 22

this type of business activity is the primary activity of the business; it includes: selling goods, providing services, manufacturing, cost of sales, advertising, paying employees, and paying utilities

Back 22

operating activities

Front 23

This financial statement reports operating success or failure for a period; it summarizes the revenues and expenses

Back 23

income statement

Front 24

this financial statement reports how much of the previous income was retained in the business to allow for future growth.

Back 24

retained earning statement

Front 25

how do you find the ending balance retained earnings?

Back 25

beginning balance retained earnings +net income - dividends

Front 26

This financial statement provides information about cash receipts and cash payments for a period of time.

Back 26

statement of cash flows

Front 27

The following resources owned by the business are called what??
-cash
-accounts receivable
-inventories
-furniture and fixtures
-equipment
-supplies

Back 27

assets

Front 28

these are obligations or debts of the business that include
-notes payable
-accounts payable
-interest payable
-salaries payable
-unearned revenue

Back 28

liability

Front 29

money received in advance for goods and services you will provide in the future

Back 29

unearned revenue

Front 30

ownership claims on assets; includes common stock and retained earning

Back 30

stockholders equity

Front 31

what is the basic accounting equation?

Back 31

assets = liability + stockholder's equity

Front 32

ability of company to pay near term obligations; ability to pay obligations expected to become due within the next year or operating cycle

Back 32

liquidity

Front 33

ability to fund operations and expansion

Back 33

capital resources

Front 34

how well the company is doing

Back 34

results of operations

Front 35

cash is a..

Back 35

asset

Front 36

accounts receivable is a..

Back 36

asset

Front 37

supplies

Back 37

asset

Front 38

prepaid insurance

Back 38

asset

Front 39

equipment

Back 39

asset

Front 40

notes payable

Back 40

liability

Front 41

accounts payable

Back 41

liability

Front 42

interest payable

Back 42

liability

Front 43

unearned revenue

Back 43

liability

Front 44

salaries payable

Back 44

liability

Front 45

common stock

Back 45

stockholders equity

Front 46

retained earnings

Back 46

stockholders equity

Front 47

PPE

Back 47

asset

Front 48

notes receivable

Back 48

asset

Front 49

inventory

Back 49

asset

Front 50

intangible items such as patent

Back 50

intangible asset

Front 51

land

Back 51

PPE - asset

Front 52

office equipment

Back 52

PPE - asset

Front 53

accumulated depreciation

Back 53

less- asset

Front 54

long term investment: investment in stock/ real estate

Back 54

asset

Front 55

mortgage payable

Back 55

long term liability

Front 56

short term investments

Back 56

asset