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Financial Statements
ACCT 102 Midterm #1
| Term | Definition |
|---|---|
| Balance Sheet | reports Assets, Liabilities, and Owner's Equity |
| Assets = | Liabilities + Owners Equity |
| OE = | Capital Stock + RE |
| Book Value | The value of a company as measured by the amount of owners' equity; that assets less liabilities |
| Fair Market Value | The value of a company as measured by the number of shares of stock outstanding multiplied by the current market price of the stock; the current value of the business |
| Income Statement | reports the amount of net income earned by a company during a period. |
| Statement of Cash Flows | Answers what happened to the money, runs solely on a cash basis. - Why/where the money went and where it came from is important |
| Cost Principle | The idea that transactions are recorded at their historical costs or exchange prices at the transaction date. |
| Arm's length transactions | business dealings between independent and rational parties who are looking for their own interests |
| Monetary Measurement | The idea that money is the accounting unit of measurement and that only economic activities measurable in monetary are included. (Notes are supplementary) |
| Going Concern assumption | the idea that an accounting entity will have a continuing existence for the foreseeable future. |
| Double Entry Accounting | A system of recording transactions in a way that maintains the equality of the accounting equation. |
| Classified Balance Sheet | A balance sheet in which assets and liabilities are subdivided into current and longterm categories |
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cindysmile79
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