Chapter 1

Accounting 2050 with Biondich at University of Minnesota - Twin Cities

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By: Alexandra Eddy
Created: 2011-10-09
Size: 19 flashcards
Views: 21

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Accounting

A system that collects and processes financial information to decision makers.

Dividends

a portion of what the company earns in the form of cash payments

Financing activities

Borrowing additional money/paying back money to lenders/dividends.

Investing activities

buying or selling items used in producing a product

Balance sheet

"statement of financial position"
reports the amount of assets, liabilities, and stockholders' equity of an accounting entity at a point in time.

A= L + SE (Basic accounting equation)

Accounting entity

The organization for which financial data are to be collected.

Income Statement

"Statement of earnings" "Statement of operations"
reports the revenues less the expenses of the accounting period

Revenues – Expenses = Net Income (profit)

Accounting period

the time period covered by the financial statements

Statement of retained earnings

Reports the way that net income and distribution of dividends affected the financial position of the company during the accounting period.

Beginning retained earnings + Net Income – Dividends = Ending Retained Earnings

Statement of Cash Flows

Reports inflows and outflows of cash during the accounting period in the categories of Operating, Investing, and Financing activities.

Cash flow from Operating Activities

Cash Flow directly related to earning income.

Cash Flow from Investing Activities

Cash Flow from purchase/sale of productive assets.

Cash Flow from Financing Activities

Cash Flow from investors/creditors.

Generally Accepted Accounting Principles (GAAP)

Measurement rules used to develop the information in the financial statements.

Securities and exchange commission (SEC)

The U.S. Government agency that determines the financial statements that public companies must provide to stockholders and the measurement rules that they must use in producing those statements.

Financial Accounting Standards Board (FASB)

The private sector body given the primary responsibility to work out the detailed rules that become generally accepted accounting principles.

Audit

an examination of the financial reports to ensure that they represent what they claim and conform with GAAP.

Public Company Accounting Oversight Board (PCAOB)

The private sector body given the primary responsibility to issue detailed auditing standards.

4 Basic Financial Statements

Balance Sheet (single point in time--Resources owned and amounts owed are listed in order of liquidity)
Income Statement (All revenues earned from sales to customers as well as expenses incurred to produce those revenues)
Statement of Retained Earnings (Accumulated net earnings less dividends to owners represents re investments in the company)
Statement of Cash Flows (In and outflow of cash, Investment activities, financing activities and operating activities.)

About this deck

By: Alexandra Eddy
Created: 2011-10-09
Size: 19 flashcards
Views: 21

About StudyBlue

“I have been getting MUCH better grades on all my tests for school. Flash cards, notes, and quizzes are great on here. Thanks!”
Kathy