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6 Cards in this Set
- Front
- Back
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Income Statement |
shows a company’s financial performance because it shows the accumulation of all nominal accounts over a period of time |
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Balance Sheet |
reflects a company's financial position at a given point in time |
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Net Income/Loss |
the sum of all revenues and expenses (all nominal accounts) is used to find the net income/(loss) for the year |
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Trial Balance |
Includes all of the accounts needed to create the balance sheet and the income statement Much MORE detailed than the balance sheet and income statement accounting principle of materiality says that the information on the trial balance can be combined and simplified into more general reporting items Includes not only the nominal accounts used to build the income statement, but also the real accounts used to build the balance sheet |
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GAAP vs IFRS |
US GAAP will generally list assets and liabilities in order from most liquid to least liquid while IFRS will generally do the opposite |
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Closing Process |
At the end of the financial year, the closing process transfers the net income to retained earnings and zeroes out the revenue and expense accounts. This explains the link between the income statement and balance sheet, but it does not help in discerning the appropriate level of detail for a financial report. Nominal accounts are reset to zero. Net income is transferred to the retained earnings account on the balance sheet |
