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Accounting unit 1
| Question | Answer |
|---|---|
| What are Current Assets? | Cash, Cash equivalents, Accounts Receivable, Allowance for Uncollectable Accounts, Supplies, Inventory, Prepaid Expenses, Interest Expenses |
| What are long term assets? | Long term investments, PPE, Operating leases, Intangible assets, other long term assets |
| What are Current Liabilities? | Accounts payable, deferred revenue, accrued liabilities/expenses, current portion of long term debt |
| What are Longterm Liabilities? | notes payable, bonds payable, lease obligations, pension obligations |
| Net income | Company's final profit or loss after all revenue gains, expenses, and losses are considered including taxes |
| Operating income | Company's profit from its core operations after subtracting operating expenses. |
| Gross profit | Profit earned from sales after subtracting the costs of producing or delivering their goods or services |
| Pretax income | income earned after all revenues and expenses are considered except income taxes |
| What three business activities do businesses engage in? | financing, investing, financing activities |
| Types of business organizations? | sole proprietorship, partnership, corporations |
| What are the 6 measurement categories of accounting? | Assets, Liabilities, Stockholders' Equity, Dividends, Revenue, and Expense |
| What are financial statements? | backbone of business accounting, helping companies track their financial performance |
| 4 Financial statements | Income Statement, Balance Sheet, Statement of stockholder Equity, Statement of Cash Flow |
| Income Statement Formula | Revenue-Expense= Net Income |
| Statement of SE formula | Common stock : BB CS + New Issuance= EB CS Retained Earnings: BB RE + Net Income - Dividends= EB RE Total SE= EB RE+EB CS |
| Balance Sheet Formula | A= L+SE |
| Statement of Cash flow formula | Operating + Investing+ Financing= Change in Cash+ Beginning Cash = Ending Cash |
| Common types of expenses | Cost of goods sold, Selling, general, and administrative, Interest expense, Income Tax Expense |
| Common asset measurement methods | Historical Cost, Amortized Cost, Market Value |
| Cash | Money a company has on hand or in the bank. |
| Cash equiv. | Short-term, very safe investments easily turned into cash. |
| Accounts receivable | Money customers owe the company. |
| Allowance for uncollectible accounts | Estimate of receivables that won’t be collected. |
| Supplies | Items used in daily business operations. |
| Inventory | Goods held for sale to customers. |
| Prepaid Expense | Expenses paid in advance (like rent or insurance). |
| Interest receivable | Interest earned but not yet received. |
| Operating leases | Leases treated like rental agreements. |
| Intangible Assets | Non-physical assets with value (patents, trademarks). |
| Accounts payable | Money the company owes to suppliers. |
| Deferred Revenues | Cash received before earning it (Netflix getting paid a monthly subscription before the month is watched) |
| Accrued Liabilities | Expenses owed but not yet paid. |
| Current portion of long term debts | Part of long-term debt due within one year. |
| Notes payable | Written promises to repay borrowed money. |
| Bonds Payable | Long-term debt issued to investors. |
| Lease oblighation | Amount owed under a lease agreement. |
| Pension obligations | Money owed to employees for retirement benefits. |
| Contributed Capital | Money investors put into the company.. Usually divided unto common stock and additional paid in capital. |
| Retained Earnings | Profits kept in the business. |
| Common stock | Ownership shares issued to investors. |
| External Transactions | business activities between the company and external parties |
| What do external transactions do? | they involve other entities, their effects are recorded in accounts, each account tracks a specific item, the account EB= accounts BB + increases - decreases |
| Debts go on what side of sheet? | Left |
| Credits go on what side of sheet? | Right |
| Normal balance | the "increase" side of an account, where you expect the balance to be |
| Decreases refer to? | any account on the opposite side |
| Journals | Provides chronological record of all transactions affecting a company. All accounts MUST be positive. |
Created by:
user-2022293