MIE 201 NCSU Exam 5 Review Questions With
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Accounting equation Assets = Liabilities + Owner's Equity
Double-entry bookkeeping a system of recording and classifying business transactions in
separate accounts in order to maintain the balance of the accounting equation.
Cer...
Double-entry bookkeeping a system of recording and classifying business transactions in
separate accounts in order to maintain the balance of the accounting equation.
Certified Public Accountant (CPA) an individual who has been certified by the state in
which they practice to provide accounting services ranging from the preparation of financial
records and the filing of tax returns to complex audits od corporate financial records
Accounting Cycle In any accounting, financial data typically pass through four step
procedure sometimes called the accounting cycle. The steps include examining source
documents, recording transactions in an accounting journal, posting recorded transactions, and
preparing financial statements
Financial Statements -The income statement, the balance sheet, and the statement of cash
flows are the best-known examples of financial statements
, MIE 201 NCSU Exam 5 Review Questions With
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-It is important to recognize that not all financial statements follow precisely the same format.
The fact that different organizations generate income in different ways suggests that when it
comes to financial statements, one size definitely does NOT fit all
Generally Accepted Accounting Principles (GAAP) Each country has a different set of
rules that the business within that country are required to use for their accounting process and
financial statements. However, a number of countries have adopted a standard of accounting
principals known as International Financial Reporting Standards
International Financial Reporting Standards (IFRS) Accounting standards, issued by the
IASB, that have been adopted by many countries outside of the United States.
Income statement a financial report that shows an organization's profitability over a period
of time, be that a month, quarter, or year.
It offers one of the clearest possible pictures of the company's overall revenues and the costs
incurred in generating those revenues.
, MIE 201 NCSU Exam 5 Review Questions With
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Balance sheet -Represents a snapshot of an organization's financial position at a given
moment. The balance sheet indicates what the organization owns or controls and the various
sources of the funds used to pay for these assets such as bank debt or owners' equity.
-Assets MUST equal liabilities plus owners' equity
Balance sheets are presented in two different formats. The traditional balance sheet format
placed the organization's assets on the left side and its liabilities and owners' equity on the right.
Now, a vertical format, with assets on the top followed by liabilities and owners' equity has
gained wide acceptance.
Statement of Cash Flows The third primary financial statement which explains how the
company's cash changed from the beginning of the accounting period to the end. Cash is an asset
shown on the balance sheet
Ratio Analysis calculations that measure an organization's financial health, brings the
complex information from the income statement and balance sheet into sharper focus so that
managers, lenders, owners, and other interested parties can measure and compare the
organization's productivity, profitability, and financing mix with other similar entities
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