question

accounting

answer

the informations system that identifies and records the economic events of an organization and then communicates them to a variety of interested users

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internal users

answer

plan, organize and run companies, users within the organization, accounting info helps make decision(whether to buy new equipment or not)

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operating line of credit

answer

pre-arranged back loan got a maximum amount that allows a company to draw more money there is in hand in its bank account

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common shares

answer

amount paid by investors for shares of ownership in a company

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accounting equation

answer

assets=liabilities+shareholder's equity

question

assets

answer

the resources owned or controlled by a business that provide future economic benefits

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corporation

answer

a business organized as a separate legal entity having ownership divided into transferable shares held by share holder

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deficit

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a negative balance in retained earning as a result of accumulated losses from the prior and current periods exceeding the profits

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dividends

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the distribution of retained earnings from a corporation to its shareholders, often in the form of cash

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expenses

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the decrease in economics benefits that result from the costs of assets consumed or service used in ongoing operations to generate revenue

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financing activities

answer

activities that include borrowing (or repaying) cash to lenders, and issuing (or reacquiring) shares or paying dividends to investors

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fiscal year

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an accounting period that one on year long

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gaap

answer

a general guide having substantial authoritative support, that describes how economic events should be recorded and reported for financial reporting purposes

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income statement

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a financial statement that presents the revenues and expenses and resulting profit or loss of a company for a specific period of time

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investing activities

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activities that include purchasing and disposing of long-lived assets such as property, plant, and equipment and long term investments

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liabilities

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the debts and obligations of a business. liability are claims of lender and other creditors on the assets of a business

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loss

answer

the amount by which expenses are more than revenues. the opposite of profit

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operating activities

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activities that result from day to day operations and include revenues and expenses and related accounts such as receivables, supplies, inventory and payables

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partnership

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a business owned by more than one person

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profit

answer

the amount by which revenues are more than expenses

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proprietorship

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a business owned by one person

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reporting entity concept

answer

the concept that economic activity that can be identified with a particular company must be kept separate and distinct from the activities of the owners and of all other economic entities

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retained earnings

answer

the amount of accumulated profit (less losses, if any) from the prior and current periods, that has been kept in the corporation for future use and not distributed to shareholders as dividends

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revenue

answer

the increase in economic benefit that result from the operating activities of a business, such as the sale of a product or provision of a service

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share capital

answer

shares representing the ownership interest in a corporation. if only one class of shares exists, it is known as common shares

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shareholders equity

answer

the shareholders claim on total assets, represented by the investments of the shareholders (share capital) and undistributed earnings (retained earnings) generated by the company

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statement of cash flows

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a financial statements that provide information about the cash inflows (receipts) and cash outflows (payments) for a specific period of time

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statement of changes in equity

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a financial statement that summarizes the changes in total shareholders equity, as well as each component of shareholders equity, for a specific period of time

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statement of financial position

answer

a financial statement that reports the assets, liabilities and share holders equity at a specific date

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investors

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use info to buy, hold, or sell their ownership interest

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lenders

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evaluate risks of lending money

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external users

answer

users who are outside the organization, accounting information helps to make decisions, is the company earning enough to give me my required investment?

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other creditors

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suppliers (decide on whether or not to grant credit)

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publicly traded corporations

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use international financial reporting standards (IFRS)

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private corporations

answer

may use international financial reporting standards (IFRS) or Accounting Standards for Private Enterprises (ASPE)

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public corporations

answer

distribute financial statement, listed in TSX, NYSE

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private corporations

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issues shares but not for the general public

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proprietorship

answer

simple to establish, owner controlled

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proprietorship

answer

unlimited liability, financing may be difficult, limited life

question

partnership

answer

simple to establish, broader skills and resources, shared financial resources and control

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partnership

answer

partners personally liable, transfer of ownership may be difficult, limited life

question

corporation

answer

easy to sell or transfer ownership, greater capital raising potential, legal liability, indefinite life

question

corporation

answer

more expensive and complex to set up, must file corporate income tax returns annually

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debt

answer

borrowing money from lenders and other creditors which creates a liability

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equity

answer

issuing (selling) ownership interests in the corporation to share holders

question

operating line of credit

answer

pre arranged bank load for a maximum amount that allows a company to draw more money then there is in hand in its bank account

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bank indebtedness

answer

when a company uses its operating line of credit to cover ash short falls and overdrawn its bank account

question

common shares

answer

amount paid by investors got shares of ownership in a company

question

loan payable

answer

payable sum of money borrowed from the bank

question

investing activity

answer

purchase or sale of long term investments

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investing activity

answer

purchase or sale of long lived assets such as equipment

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goodwill

answer

results from the acquisition of another company when the price paid is higher then the value of the purchased company's net identifiable assets

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intangible assets

answer

assets that do not have any physical substance themselves but represent a privilege or a right granted to or held by a company (patents, copyrights, trademarks)

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profit/loss

answer

revenues-expenses

question

accounting equation

answer

assets=liabilities+shareholders equity

question

annual report

answer

publicly traded companies must prepare an " " each year

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financial and non financial information

answer

annual reports include

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