2. Who are the users of accounting information?
The users of accounting information are called stakeholders. Stakeholders include resources providers, financial analyst, broker attorneys, government regulators, news reporters. 3. What body establishes accounting rules in the U.S.? What are the rules called? The bodies that establish the accounting roles are the financial accounting standards board FASB. The rules are called the generally accepted accounting principles GAAP 4. What is the accounting equation?
Assets= liability+ stock holders equity
5. What are assets, liabilities and owners’ equity? Give examples. Assets- are economic resources used by a business to produce revenue. Liabilities- obligations for a business to religious assets, provide services or accept obligation. Stock holders equity- represents the portion of assets that is owned by stockholders Assets= land + cash
Stock holders equity- common stock and retained earnings
6. What does double entry bookkeeping system mean?
Double entry bookkeeping system means all transactions affect the accounting equation in at least two places. 7. Who are the residual owners of a business?
8. What are dividends?
Are when a business transfers some or all of its earning to owner. 9. List the 4 financial statements. What does each statement tell you about a company? Income statement- matches revenue with the expenses and tells the net income or net losses. Statement of change in stockholders equity- reports changes in common stocks. Changes in retained earnings. Balance Sheet- total assets balance sheet equal
Statement of cash flows- explains how a company obtained and cash during the accounting period. 10. What is the horizontal financial statement model?
Shows a set of financial statements across a single page or paper 11. What is the difference between financial and managerial accounting? Difference between managerial and financial accounting are that financial accounting reports to those outside the organization owners, lender, tax authorities and regulators on the country. Managerial accounting reports to those inside the organization for planning directing and maintaining and controlling and performed evaluation. 12. What is an asset source transaction? Asset exchange? Asset use? Give an example of each. Assets source of transaction- increased in total amount of assets and increased in total amounts of claims. Assets exchange transaction- decrease in one asset and increase in another asset Asset transaction- decrease in total amount of assets and total amount of claims. 13. What are retained earnings? What increases it? Decreases it? Retained earnings are the portion of assets that has been provided by earning activities and net retained by dividends retained earnings are decrease by expenses and common stocks, and increase by profit.
14. What is the historical cost concept? How does it relate to the reliability concept? Historical cost concept requires that most assets be reported at the amount paid for them ( their historical cost) regardless of increase in the market value. This concept relies with reliability concept because its an information that is reliable if it can be independently verified. Reliable information is factual. All in all the historical cost is a verifiable fact. 15. List and describe the 3 sections of the Statement of Cash Flows? Give examples of items in each section. The three statement of cash flows are classify into three categories Financial activities- includes obtaining cash flows from owner or paying cash (out flows) to owners dividend. It also includes borrow cash from creditors or repaying principals from creditors.
Cash receipt rom borrowing funds
Cash from issuing a common stock
Investing activities- involves purchasing long term assets or receiving cash from selling long term assets long term assets are normally more than one year....
Please join StudyMode to read the full document