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46 Cards in this Set
- Front
- Back
What is Accounting
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Counting Money
Accounting for Money |
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Why Accounting
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Good business tool for making business decisions
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Two broad categories of accounting information users are
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Internal to the business entity, external to the business entity.
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Two types of accounting for the type of internal and external users of accounting information
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Financial Accounting - Externals
Managerial Accounting - Internals |
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Most important thing about accounting?
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Shared vocabulary and shared assumptions. Apples are apples and oranges are oranges.
Because we must make informed shared decisions |
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What two bodies oversee accounting standards
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FASB - Financial Accounting Standard Boards
GAAP - Generally accepted Accounting Principles |
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What are the 4 type of general financial statements.
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1) Cash Flow
2) Income Statement 3) Balance Sheet 4) Changes in Equity |
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What is the difference between Cash Accounting and
Accural Accounting. |
Record of Sale:
1) When the cash is received 2) When the goods are shipped (Accural - a cruise SHIP) |
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Name 10 elements that comprise financial statements
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gains, losses
net income, distributions revenue, expenses contributed capital assets = liabilities + equity |
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Income Statement
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A given company
for a given period of time inputs this much revenue and outputs this much expenses resulting in New Income or Change in Next Assets for the given period of time. |
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Assets increases are called:
Asset decreases are called: |
Revenues
Expenses |
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Difference between revenues and expenses are called:
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Net Revenues (if positive)
Net Loss (if negative |
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Financial Statement:
Changes in Equity |
For a given period, for a given entity, we have Contributed Capital and Retained Earnings.
Both have a beginning and ending balance and it is equal to the Total Equity that has changed. |
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Balance Sheet
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Assets = Liabilities + Equity
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Claims =
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Claims = Liabilities + Equity
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True or False
Total Claims are equal to Total Assets |
True. Assets must have a source so they balance with claims.
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What are some of the back office activites of accountants
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payroll
cash inflows cash payments purchases inventory property records |
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What are some of the tax aspects that accountants work with?
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Payroll Tax
Property Tax Sales Tax Income Tax |
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Can P&L be determined by the balance sheet?
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No, look at the income statement
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FAQ
Accounts deal with the past and predicting the future (future forcasts) |
FAQ
Assets are the economic resourses claimed by the business. |
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FAQ
An accountant must determine how to allocate shared costs. |
FAQ
Assets = sources of assets |
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FAQ
Accounts array and measure and calculate: They also communicate the results to others |
FAQ
Income Statement = Revenue inflows - expense outflow for a given entity, for a given time period. |
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FAQ
Accounts design the internal control of the accounting systems |
FAQ
Statement of Cash Flow summarizes the business cash inflow and outflow for a period |
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The Balance Sheet is commonly referred to as the
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Statement of Financil Condition
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In the balance sheet how are assets valued.
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Assets are valued at their purchase price unless they have lost value.
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Accounting Equation equals
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asset = liabilities + owners equity.
(Owner equity can consist both of contributed capital and retained earnings) |
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Payroll:
The total wages and salaries earned by a employee during a period is called |
Gross Wages
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Accellerated Depreciation
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A method of estimating of a item useful live and allocating that cost of a fixed asset over time. Acclellerated depreciation allocates greater amount to the the cost early in life and lower amount later in life.
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Two Types of Depreciation
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Accellerated Depreciation
Straightline Depreciation |
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Straightline Depreciation
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Spreading the cost of a fixed asset in eqaual amounts to each year of its useful life. Depreciation is the same amount every year by this method.
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Why do we depreciate the value of something?
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A method of estimating a item's useful live and allocating that cost (expense) of a asset over time.
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Accounts Payable
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short term liabilities on the amount owe to vendors or suppliers for parts, materials, services. Usually not interet burden unless not paid on time
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Accounts Receivable
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Short term assets... amount owed to the entity business ecause of parts, products materials or services. Usually not interest bearing unless not paid on time.
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General Ledger
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huge database capturing all transactions in a double entry format.
Collect things such as: Transation: date amount type: debit or credit vendor purchase order number invoice number payment date, payment method, budget code, account title and code. |
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What are the three financial statements that summarize the general ledger?
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Income Statement
Cash Flow Balance Sheet |
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The income statement can also me called?
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The P&L, the profit and loss statement and the earnings statement.
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A cash flow statement is simalar to your...
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Bank Account Statement
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The bottom line on the income statement is called?
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Net Income
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FAQ:
The difference between your assets - liabilities in your personal networth. |
FAQ: for businesses Think Lean and Mean
Make productive use of our resources in a way that generates profits. |
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loan convenants are
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clauses of the loan agreement that are promises you make to the bank so they will loan you money
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Who owns the company?
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With Debt the Lenders
With Stock, the Shareholders With Retained earnings... the business owns the business. |
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Powers of the shareholders are...
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1) They can vote on
2) articles of incorporation 3) board of directors who choose the executive management |
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FAQ
Working capital = current assets - current liabilities. * things that can with a high probality turned to cash. |
The best business in the world is where we put a little in and get a whole lot out. For example wouldn't it be great if we could invest 10 cents and get $5 dollars out.
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Factoring
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selling your accounts receivable to a bank (factoring agent) to get cash (reduced) on the dollar.
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Costs:
Fixed Costs Variable Costs Semi-variables Costs |
Fixed costs stay constant regardless of regardless of the variables such as number of units produced.
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Direct Costs are
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costs that you can logically trace to the creation of the product.
Indirect costs include marketing, selling and designing the product. |