- Answers-System that collects and processes (analyzes, measures, and records) financial information about an organization and reports that information to decision makers.
.Accounting entity - Answers-Is the organization for with financial data are to be collected.
.The four basic statements:...
FinancialAccountingAccounting
- Answers-System that collects and processes (analyzes, measures, and records) financial information about an
organization and reports that information to decision makers.
.Accounting entity - Answers-Is the organization for with financial data are to be collected.
.The four basic statements: - Answers-1. Balance Sheet
2. Income Statement
3. Statement of Retained Earnings
4. Statement of Cash flows
.Balance Sheet - Answers-Reports the amount of assets, liabilities and stockholders' equity of an accounting
entry at a point in time.
.Income Statement - Answers-Reports the revenues less the expenses of the accounting period.
.Statement of Retained Earnings - Answers-Reports the way that net income and the distribution of dividends
affected the financial position of the company during the accounting period.
.Statement of Cash Flows - Answers-Reports inflows and outflows of cash during the accounting period in the
categories of operating, investing, and financing.
.Assets - Answers-Are the economic resources owned by the company. Each of these economic resources is
expected to provide future benefits to the firm.
.Liabilities - Answers-Are the company's debts or obligations. Which will be paid with assets or services.
,.Stockholders' Equity (Owners' Equity) - Answers-Indicates the amount of financing provided by owners of the
business and earnings. Is the sum of the contribute capital + the retained earnings.
.Accounting Period - Answers-Is the time period cover by the financial statements.
.Elements of the Income Statement - Answers-Revenues, Expenses and Net Income.
.Revenues - Answers-Earnings from the sale of goods or services to costumers. Revenues are reported whether
or not have yet been paid for.
.Expenses - Answers-Represent the dollar amount of resources the entity used to earn revenue during the
period.
.Net Income ("the bottom line") - Answers-Is the excess of total revenues over total expenses.
.Net Loss - Answers-If total expenses exceed total revenues.
.Retained Earning Equation - Answers-Ending Retained Earnings = (Beginning of Retained Earnings + Net
Income) - Dividends
.Cash Flow from Operating Activities, and examples - Answers-CFO- Are cash flow that are directly related to
earning income. Example, collecting cash from costumers, pay salaries, pay bills, pay to suppliers.
, .Cash Flow from Investing Activities, and examples - Answers-CFI- Are cash flow related to the acquisition or
sale of the company's productive assets. Example, the purchase of additional equipment.
.Cash Flow from Financing Activities, and examples - Answers-CFF- Are cash flow directly related to the
financing of the enterprise itself. Example, the payment of money to investors and creditors.
.Notes - Answers-"Footnotes" provide supplemental information about the financial condition of a company.
.GAAP - Answers-Generally Accepted Accounting Principles, are the measurement rules used to develop the
information in financial statements.
.SEC - Answers-Security and Exchange Commission, is the U.S government agency that determines the financial
statements that public companies must provide to stockholders, and the rules that they must use in producing
those statements.
.FASB - Answers-Financial Accounting Standards Board, is the private sector body given the primary
responsibility to work out the detailed rules that become GAAP.
.Audit - Answers-Is an examination of the financial reports to ensure that they represent claim and comfort
with GAAP.
.Primary objective of external financial reporting - Answers-Is to provide useful economic information to help
external parties make financial decisions.
.Qualitative Characteristics of Financial Information - Answers-Information should be Relevant and Reliable.
.Separate-Entity Assumption - Answers-States that a business transactions are accounted for separately from
the transactions of owners.
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