Financial Accounting Chapter 1

shareholder – a person who buys stock in the corp.
Depreciation – Expense created by allocating the cost of plant and equipment to periods in which they are used; represents the expense of using the asset.
PP&E – Property, Plant and Equipment
Debtors – People that owe money to a business
Current assets are assets expected to be converted to cash, sold, or consumed: – within the nex 12 mths
drawings – when the owner takes cash from the business for his or her own use
Posting – Transferring information from a journal entry to a ledger account.
In order for a free market to automatically generate the efficient outcome, it must be true that
Debt-to-Assets Ratio – total liabilities/total asset (at the end of the year)
True – A withdrawal decreases owners equity
Intangible Assets – goodwill, trademarks, patents, copyright
Tax Accountant – Prepares GST returns.
bonds payable – amounts owed to investors (normally long-term)

the amount is the principle amount owed only and does not include interest

In оrder fоr а free mаrket tо аutomatically generate the efficient outcome, it must be true that
Events – Happenings that both affect an organization's financial position and can be reliably measured.
payment date – the date of the actual cash distribution of dividends
second step – quantify the economic impact of the change
Always do your – – – first, then your – – – – credits, debits
Accrued expenses – Expenses incurred but not yet paid in cash or recorded.

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