Accounting Chapter 1 WileyPLUS – Flashcards
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Operating Activities
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-Cash received from customers -Cash paid to suppliers
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Financing Activities
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-Cash paid to stockholders (dividends) -Cash received from issuing new common stock
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Investing Activities
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-Cash paid to purchase a new office building
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Costs incurred for advertising
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Affects: Expense Account Title: Advertising expense
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Assets received for services performed
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Affects: Revenue Account Title: Service revenue
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Costs incurred for insurance
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Affects: Expense Account Title: Insurance expense
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Amounts paid to employees
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Affects: Expense Account Title: Salaries and wages expense
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Cash distributed to stockholders
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Affects: Dividends Account Title: Not applicable
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Assets received in exchange for allowing the use of the company's building
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Affects: Revenue Account Title: Rent revenue
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Costs incurred for utilities used
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Affects: Expense Account Title: Utilities expense
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Cash purchase of equipment
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Affects: Does not affect Stockholders' Equity Account Title: Not applicable
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Cash received from investors
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Affects: Common stock Account Title: Not applicable
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Income Statement
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-Income tax expense -Sales revenue -Cost of goods sold -Interest expense
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Balance Sheet
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-Inventory -Accounts payable -Retained earnings -Equipment -Common stock -Accounts receivable
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Auditor's Opinion
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An expression about whether financial statements conform with generally accepted accounting principles; an independent assessment concerning whether the financial statements present a fair depiction of the company's results and financial position.
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Corporation
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A business that raises money by issuing shares of stock.
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Common Stock
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The portion of stockholders' equity that results from receiving cash from investors.
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Accounts Payable
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Obligations to supplier of goods.
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Accounts Receivable
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Amounts due from customers.
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Creditor
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A party to whom a business owes money.
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Stockholder
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A party that invests in common stock.
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Partnership
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A business that is owned jointly by two or more individuals but does not issue stock.
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Liability
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payable
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Asset
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receivable, equipment, inventory, cash
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Revenue
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revenue
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Expense
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expense
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Financial Statements
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The total cumulative amount received from stockholders in exchange for common stock; Total revenue from operating activities.
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Notes to the financial statements
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The interest rate that the company is being charged on all outstanding debts.
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Management discussion and analysis
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Management's assessment of the company's results.
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Not disclosed
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The names and positions of all employees hired in the last year.
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1. Income Statements
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-Revenue -Expenses -Net income (loss) -Period of Time
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2. Statement of Retained Earnings
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Beginning Retained Earnings + Net Income - Dividends = Ending RE
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3. Balance Sheet
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-Point in time -Assets = Liabilities + Stockholders' equity
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4. Statement of Cash Flows
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-Period of Time -Operating -Investing -Financing
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Assets =
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Liabilities + Stockholders' equity (retained earnings & capital/common stock)
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Investing
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Marketable securities, fixed assets
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Financing
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Creditors, stock, dividens
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Ending Retained Earnings =
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Beginning balance of retained Earnings + Net Income - Dividends
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Net Income =
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Revenue - Expenses
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Current Assets (can be liquidated for cash)
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-Cash -Short-Term Market & Liability Insurance -Accounts Receivable -Long-Term Investments
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Property, Plant & Equipment (PP&E)
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-used by the business -what you pay is what it goes on the balance sheet as (Historical Cost Principle) -NOT the value of the business
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Intangibles
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-no physical substance -patented logos & taglines
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Current Liabilities
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-Notes Payable -Accounts Payable
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Long-Term Liabilities
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-Notes Payable
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Stockholders (Owners) Equity
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-Current Assets -Retained Earnings
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Profitability
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Operating success for given period of time; Income Statement; Earnings Per Share
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Liquidity
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Ability to pay obligations expected due within the year; Working Capital; Current Ratio
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Solvency
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Ability to survive over time; Debt-To-Assets; Free Cash Flow
