Term
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Definition
| Revenues-Expenses=Net Income |
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Term
| Statement of Retained Earnings |
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Definition
Net Income - Dividends = Retained Earnings
Links the Balance Sheet and Income Statement |
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Term
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Definition
| Assets, Liabilities, Stockholder's Equity, Retained Earnings. |
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Term
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Definition
Beginning and Ending Cash Balances,
Operating, Investing, and Financing Activities |
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Term
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Definition
| Some of the liability is dispersed, legal liability still goes to your possessions, but less. |
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Term
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Definition
| Business owned by one person. You are personally responsible for all debts of the business |
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Term
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Definition
| Separate entity from both legal and accounting perspectives. Owners (Stockholders) of the company are not personally responsible for the debts. |
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Term
| Separate Entity Assumption |
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Definition
| A business's financial reports only include the activities of the business and not of the stockholders. |
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Term
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Definition
| Generally Accepted Accounting Principles. Underlying Rules Written by FASB |
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Term
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Definition
| Gives the FASB the right to write the GAAP |
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Term
| Public Company Accounting Oversight Board |
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Definition
| Establishes Auditor's rules. |
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Term
| Sarbanes-Oxley Act of 2002 |
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Definition
| Maintain a system of internal controls. Auditors. Encourages good character, reduces opportunities to cheat. |
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Term
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Definition
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Term
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Definition
| Every transaction has at least 2 effects. |
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Term
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Definition
| Whatever is the increase side of the account |
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Term
| Useful Information Consists of |
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Definition
| Reliability, Relevance, Comparability, Consistency. |
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Term
| Unqualified Audit Opinion |
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Definition
| Indicates that the financial statements are delivered in accordance to GAAP |
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Term
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Definition
| They did not follow GAAP, or they did not provide the correct information. |
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Term
| Multi-Step Income Statement |
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Definition
| 3 Years, breaks out income from other places |
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Term
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Definition
| The long life of a company can be divided up into parts. |
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Term
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Definition
| Records revenues when cash is received and expenses when cash is paid. |
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Term
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Definition
| Requires that revenues must be recorded when they are earned. |
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Term
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Definition
| GAAP Approved. Record revenues when they are earned and expenses when they are incurred, regardless of the timing of cash or payments. |
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Term
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Definition
| Requires expenses to be recorded in the time period in which they are incurred. |
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Term
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Definition
| When cash is received before promised acts are performed. Increase in cash, increase in liability called Unearned Revenue (Credit). When earned, Debit Unearned Revenue, Credit Revenue. |
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Term
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Definition
| Cash is paid before the cost is incurred. Decrease in cash, increase in prepaid expenses. Afterwards, increase Expenses, increase in a liability called a payable. |
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Term
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Definition
| If some/all of an assets future benefits have been used up. The company provides goods or services to satisfy a liability. |
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Term
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Definition
| Assets and revenues that have been generated in the current period but have not been recorded in the current period. |
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Term
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Definition
| Revenues, Expenses, Dividends. |
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Term
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Definition
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Term
| Closing Temporary Accounts |
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Definition
| Transfer Net Income and Dividends to R/E. Establish zero balances in temp accounts. Debit revenue accts, credit expense. Debit or credit the difference to r/e and credit dividends declared and debit retained earnings. |
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Term
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Definition
| Most Accurate Method. Cost of each item sold is individually identified and recorded. |
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Term
| First in-First Out (FIFO) |
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Definition
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Term
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Definition
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Term
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Definition
| "Lots of stuff that costs different amounts" Average the CoGS. |
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