• Shuffle
    Toggle On
    Toggle Off
  • Alphabetize
    Toggle On
    Toggle Off
  • Front First
    Toggle On
    Toggle Off
  • Both Sides
    Toggle On
    Toggle Off
  • Read
    Toggle On
    Toggle Off

Card Range To Study



Play button


Play button




Click to flip

Use LEFT and RIGHT arrow keys to navigate between flashcards;

Use UP and DOWN arrow keys to flip the card;

H to show hint;

A reads text to speech;

57 Cards in this Set

  • Front
  • Back
What are 3 primary activities all business engage in?
1. Financing
2. Investing
3. Operations
Who are the primary users of financing information? (List 4)
Managers and employees, Investment analyists, Creditors and suppliers, Shareholders and directors, Customers and strategic partners, Regulators and tax agencies
What are the 4 primary financial statements required to be published by all public companies?
Balance Sheet, Income Statement, Statement of Stockholder Equity, Cash Flow Statement
Which financial statement reflects information as of a specific point in time?
Balance Sheet
Which financial statement shows information about a company's sales and expense?
Income Statement
Which financial statement shows a company's market value?
None of the four primary financial statements
What is the accounting equation?
Assets = Liability + Stockholders' Equity
What does ROE stand for?
Return on Equity
What term is used to describe the body of rules used in financial accounting?
GAAP - Generally Accepted Accounting Principles
What is FASB?
Financial Accounting Standards Board - Sets the accounting standards for public companies in the U.S.
Securities and Exchange Commission - Enforces the nation's federal securities laws and regulations.
International Accounting Standards Board - Sets the accounting standards for use by countries other than the United States.
What is Net Book Value?
Assets less Liabilities; how the company is worth based on the accounting formula.
What is net income?
The difference between revenue and expenses
Measuring Profit Margin
Net income/Net sales - measures the profitability of each dollar of sales.
Measuring Asset Turnover
Sales/Average Assets - measures the productivity of assets
Return on Assets
Net income/Averages Assets - measures the return on total investment. Also profit margin x asset turnover
Return on Equity
Measures the return on owners investment
American Institute of Certified Public Accountants - Standard setting and CPA oversight
Public Companies Accounting Oversight Board - regulatory oversight of auditors
Expenditures expected to result in a current (expense) or future benefit (asset)
Cost allocation of an asset over time
Current Assets
Assets expected to be converted in one year. (ie. cash, accounts receivable, inventory)
Long-Term Investments
Assets expected to be held longer than one year.
Plant property and Equipment
Assets used in operation that have a life longer than one-year.
Intangible Assets
Assets without physical substance. (ie. patents, trademarks, copyrights, goodwill)
Working Capital
Difference between current assets and current liabilities.
Capital Stock
par value of stock sold to original investors
Additional paid-in-capital
value of stock sold to original investors
Retained Earnings
Accumulated net profits not distributed to stockholders as dividends.
Historical Cost Principle
Assets and liabilities that are generally carried on the balance sheet at historical cost. Most objective and verifiable measurement.
Exceptions to Historical Cost Principle
Marketable securities where pricing is readily available. (ie bonds, stocks, etc)
Revenue Recognition Principle
Revenue that is recognized when: a) Earned b) Realizable.
Matching Principle
Expenses that are recognized when incurred to derive revenue (even if cash has not been paid)
Individual accounting record to keep track of increases and decreases of specific assets, liabilities, equity, revenue, or expense items.
Chart of Accounts
A list of all accounts used by a company numerically in order starting with Assets, Equity, Revenue, and Expenses
Listing of all transactions with summary totals (similar to checkbook)
General Ledger
Record of all accounts showing beginning balance, summary of transactions and ending balance
Trial Balance
A list of all accounts and their balance at a point in time (ie. end of month). Used to verify all transactions result in balanced accounting equation and to prepare financial statements.
Debits and Credits
If sum is greater on left side, DEBIT balance. If the right side, CREDIT Balance.
Annual Filing
Quarterly Filing
Material Information Filing with SEC
Prepaid Expenses
Prepaid expense reflect advance cash payment that will ultimately become expenses. (ie. prepaid advertising)
Unearned Revenue
Unearned revenue reflect cash received from customers before any services or goods are provided. (ie. tickets sold for upcoming event)
Accrued Expenses
Expenses incurred and recognized on the income statement even though they have not been paid in cash. (ie. wages payable to employees)
Accrued Revenue
Revenues earned and recognized on the income statement even though cash is not yet received. (ie. sales on credit and long-term contracts)
Accounting Information System
Process company uses to systematically collect data about accounting transactions and summarizes that into a set of financial statements.
Accrual Based Accounting
Revenue and expenses are recognized when earned and incurred, not necessarily when cash is exchanged.
Financial Statement Template: Issue Stock
Increase Cash; Increase Contributed Capital
Financial Statement Template: Purchasing Inventory on Credit
Increase Non-Cash Liabilities; Increase Liabilities
Financial Statement Template: Sell Inventory for $500 on credit
Increase Non-Cash; Increase Earned Capital
Financial Statement Template: Record Cost of Goods Sold
Decrease Non-Cash Assets; Decrease Retained Earnings (Decrease Expenses)
Financial Statement Template: Paying Dividends
Decrease Cash, Decrease Earned Revenue (Do not touch Income Statement)
Financial Statement Template: Wages not yet paid
Increase Liabilities; Decrease Earned Capital
Financial Statement Template: Received Payment for Service not yet completed
Increase cash; Increase Liability
Financial Statement Template: Paid for Advertising ahead of time
Decrease Cash and Increase Non-Cash Assets