Chapter 1 Acct. 201

Front 1

Financial Accounting

Back 1

provides info for decision makers outside the entity, such as investors , creditors, government agencies, and the public (we focus more on this than Management accounting)

Front 2

Management accounting

Back 2

provides info for managers of RadioShack. ex. includes budgets, forecasts, and projections that are used in making strategic decisions of the entity

Front 3

Proprietorship

Back 3

single owner. business records should not include the proprietor's personal finances

Front 4

Partnership

Back 4

has two ore more parties as co-owners, and each owner is a partner.

Front 5

Limited-Liability Company

Back 5

one in which the business is liable for the company's debts. owners are called members

Front 6

Corporation

Back 6

business owned by the stockholders, or shareholders. who own stock representing of ownership in the corporation

Front 7

board of directors

Back 7

sets policy and appoints officers in a corporation. CEO (chief executive officer) is the one who has the most power. COO (chief operating officer) president

Front 8

Generally Accepted Accounting Principles (GAAP)

Back 8

accountants follow professional guidelines for measurement and disclosure of financial info. The Financial Accounting Standards Board(FASB) formulates GAAP

Front 9

International Accounting Standards Board (IASB)

Back 9

sets global- or international--Financial Reporting Standards (IFRS)

Front 10

GAAP assumptions & principles

Back 10

Entity assumption (a business is a separate economic unit. Continuity (going-concern) assumption (business will continue to exist). Historical cost principle (assets recorded at purchase). Stable Monetary unit assumption (no hyperinflation)

Front 11

The Accounting Equation

Back 11

Assets= Liabilities+ Owners Equity

Front 12

Assets

Back 12

Economic resource that provides a future benefit

Front 13

Liabilities and examples of it

Back 13

Outsiders claims to assets
Accounts payable- liability for goods or services
. Notes Payable- written to pay on certain date.

Front 14

Owners Equity

Back 14

Owners claims to assets. a corporation equity is called stockholders equity

Front 15

Stockholders Equity (assets- Liabilities= Owners Equity)
and examples of it

Back 15

Paid-in capital (amount invested by stockholders, common stock)
Retained earnings (amounts earned and kept for use in the company) (increased by revenues, Decreased by expenses)

Front 16

Net income

Back 16

Revenues (earned by selling goods or services)
Expenses (costs of doing business, eg. rent and utilities)
Revenues - expenses = net income

Front 17

Dividends

Back 17

Distributions of assets (usually cash) to shareholders
Decrease Retained Earnings
Do not impact net income

Front 18

Financial Statements

Back 18

A vehicle to report the results of a business to public

Front 19

Income Statement (most important in this country)

Back 19

Measures operating performance for a period. what have you done for me lately (basically what its saying) Reports revenue and expenses and the resulting net income (or loss)

Front 20

Balance Sheet

Back 20

measures financial position as of a certain date. reports assets, liabilities, and shareholders equity. assets and liabilities are categorized as current (cash, accounts receiveable, and inventory) and long-term(property, plant, and equipment)

Front 21

Cash Flow Categories

Back 21

Operating- cash generated from day to day business activities, and related to selling goods and services to customers
Investing- related to purchasing and selling long-term assets
Financing- how a company obtains resources to finance business, and related to long-term debt and equity (issuing stock)