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25 Cards in this Set
- Front
- Back
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A balance sheet is a listing of an entitiy's ________,______________, & ______________ at a point in time
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Assets, Liabilities, Owners Equity
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A snapshot of the company
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Balance Sheet (July 23,2007)
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Balance sheet Equation
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Assets = Liabilities + Owners Equity (A=L+OE)
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Liabilities are
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what you owe
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Examples of Assets are
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Cash, Accounts Receievable, Inventory, Equipment, Accumulated Depreciation
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Assets are
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things you own
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Examples of Liabilities are
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Accounts payable, Notes Payable, Accured Liabilities
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Owners Equity is the
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Ownership right of the owner of the entity in the assets that remain AFTER DEDUCTING the liabilities
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Owners equity is sometimes referred to as
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Net Worth
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An example of an owners equity is
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Own a home with a mortgage
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An income statement tells you
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How much you made at business
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The formula for the income statement is
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Revenues-Expenses=Net Income
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Income statements are
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Reports over a PERIOD OF TIME (Monthly, Yearly, ETC)
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The first line in the income statement will always be the
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Net Sales
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The Four required financial statements are
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Balance Sheet, Income Statement, Statement of Cash Flows, and Statement of Changes in Owners Equity
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What are the categories of the Income Statement?
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Net Sales; Cost of Goods Sold, Gross Profit, and General and Administrative Expenses
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What are the Statement of Changes in Owners Equity?
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It explains the detail of equity accounts and the changes occurring during the period
EX: Went up because of _____ Went down because of ____ |
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What is Owners Equity?
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Paid in Capital + Retained Earnings
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Statement of Cash Flows is broken out into 3 categories, name them
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Operating, Investing, and Financing
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Explain all equations to know
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Assets = Liabilities + Owners Equity (A=L+OE)
Owners Equity= Paid in Capital + Retained Earnings (OE=PIC+RE) Retained Earnings=Beginning balance of Retained Earnings + Net Income - Dividends (RE=BBRE + NI - DIV) Net Income = Revenues - Expenses |
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What is "Matching"
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to reflect accurately the entity's results, you must match the expenses with the revenues
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Accrual::
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recognizing revenue at the point of sale and expenses when they are incurred, even though the cash transaction is at a different time
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AN EXAMPLE OF CASH ACCOUNTING WOULD BE
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Check book
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Full Disclosure:
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Required to fully explain financial statements
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Materiality:
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Some items are too small to worry about, so they are left incorrect (rounding, errors)
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