Chapter 1 Review–Financial Accounting (Fraser) – Flashcards

An information and measurement system that identifies, records, and communicates relevant, reliable, and comparable information about an organization's business activities.

An area of accounting aimed at serving external users by providing them with general-purpose financial statements.

An area of accounting that serves the decision-making needs of internal users.

(Know limited amount of information on the company). 1. Lenders (creditors). 2. Shareholders (investors). 3. Directors. 4. External (independent) Auditors. 5. Nonexecutive Employees and Labor Unions. 6. Regulators. 7. Voters, Legislators, and Government Officials. 8. Contributors. 9. Suppliers. 10. Customers.

(Know all the details of the company). 1. Research and Development Managers. 2. Purchasing Mangers. 3. Human Resource Managers. 4. Production Managers. 5. Distribution Managers. 6. Marketing Managers. 7. Service Managers.

To fulfill regulatory requirements for companies whose stock is sold to the public.

No effect because as one asset increases $1,300, another asset decreases $1,300.

An asset.

$137,000.

A dividend.

Accounts Receivable.

Assets, liabilities, and equity are unchanged.

Accounts payable/Wages payable.

Accounts payable.

A decrease in liabilities by $30,000 and a decrease in assets by $30,000.

Increased by $19,000.

Increased by $45,000.

Shares of stock.

Its equity.

Increased by $22,000.

It will decrease its equity.

It will increase its equity (net income = revenues - expenses).

A(ssests) = L(iabilities) + E(quity)

The SEC (Securities and Exchange Commission).

Managerial Accounting.

The FASB (Financial Accounting Standards Board).

The GAAP (Generally Accepted Accounting Principles).

A net income (the difference between revenues and expenses; increases equity).

The balance sheet.

$492,000.

The statement of retained earnings.

It would increase accounts receivable by $10,000 and increase consulting revenue by $10,000.

1. Revenues. 2. Expenses. 3. Net Income (Revenues - Expenses).

1. Retained earnings at the beginning of the month (zero if a brand new company because never existed before this day). 2. Plus the Net Income. 3. Minus the Dividends (if any). 4. Retained earnings at the end of the month (whatever all the numbers above equal out to be).

1. Assets (and total). 2. Liabilities (and total). 3. Equities (and total). 4. Total of liabilities and equities together to make sure that it equals total assets.

(Something that has future value; resources a company owns or controls). 1. Cash. 2. Notes Receivable (an asset of a company, bank or other organization that holds a written promissory note from another party. For example, if a company lends one of its suppliers $10,000 and the supplier signs a written promise to repay the amount, the company will enter the amount in its asset account 'Notes Receivable.' The supplier will also enter the amount in its liability account 'Notes Payable'). 3. Land. 4. Buildings. 5. Equipment. 6. Store Supplies. 7. Vehicles. 8. Accounts Receivable (Ex: a company provides a service or product on credit = has an account receivable from that customer). ***Receivable = an asset that promises a future inflow of resources***

(Something that we owe in the future; the creditors claims on assets). 1. Notes Payable (to the banks). 2. Wages Payable (to the workers). 3. Taxes Payable (to the government). 4. Accounts Payable (to the suppliers). ***Payable = a liability that that promises a future outflow of resources***

(Made up of amounts invested and amounts earned; the owners claim on assets). 1. Retained Earnings (the accumulated revenues minus the accumulated expenses and dividends since the company began). 2. Dividends (the outflow of resources such as cash and other assets to stockholders; reduces equity). 3. Contributed Capital (the amount stockholders invest in the company). 4. Common Stock (apart of contributed capital; reflects inflow of resources, such as cash and other net assets, from stockholders in exchange for stock; increases equity). 5. Revenues (the sales of products and services to customers, such as consulting services provided, facilities rented to others and commissions from services; increases equity). 6. Expenses (the costs of providing products and services to costumers, such as the costs of employee time, use of supplies, advertising utilities and insurance fees; decreases equity).