Fin: Ch 1: Accounting Information For Decision Making

Balance sheet – Shows the fincial position of a company at the end of an accounting period
Timely – Relevant information must be available to decision makers before it loses its capacity to influence decisions
Income Tax Expense – the amount that must be paid to the government based on a percentage of income before tax.
Ethics – are beliefs that distinguish right from wrong.
Accounting Equation – Assets = Liabilities + Owner's Equity
Assets = Liabilities + OE + Net Income
Assets = Liabilities + OE + (Rev-Exp)
Stockholder's equity – Stockholders', or owners',
claims to resources, which equal the difference
between total assets and total liabilities.
Owner's Equity, Balance Sheet, Credit, Permanent – Preferred Stock
Income statement – reports results of operations for a given period of time
-reports revenues( company's resources from providing goods or services)
-expenses (decreases in resources)
-can get net income
accounting is used to…. – accumulate financial data
measure financial performance
communicate financial info
What causes tsunamis to occur?
permanent accounts are – not closed
Trial Balance – A work paper proving the equality of the debit and credit balances in the ledger.
Classes of Stock – Par value, no par value, stated value
Accounts often need to be adjusted because – B. many transactions affect more than one time period
Whаt cаuses tsunаmis tо оccur?
face of note – the principle sum the maker of a note promises to pay
Trial Balance – list of all accounts with their balances to provide a check on the equality of the debits and credits
7 GAAP – 1. Historic cost
2. Revenue accrual
3. Matching
4. Conservatism
5. Comparability
6. Full disclosure
7. Materiality
going concern assumption – Accounting assumption that a company will continue in operation for the foreseeable future.

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