Financial Statements in Accounting Flashcards

Financial Statements in Accounting Flashcards
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Statement of Retained Earnings: Formula
Retained earnings from the beginning of the period +/- net income or loss - dividends - withdrawals by the owner = ending retained earnings
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Statement of Retained Earnings
Use this financial statement to see how much income a company has after paying out all dividends.
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Income Statement: Total Revenue
A line on an income statement that records the total amount of money that a company earned in a given period of time. You add all the company's earnings to find this.
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Income Statement: Total Expenses
This records the sum total of all the money a company pays out. Add up all expenses on the income statement to find this.
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Income Statement
Accountants can use this financial report for the easiest way to show if a given company ended up making or losing money in an accounting period.
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Statement of Cash Flow
A financial report with three sections: operating activities, investing activities and financing activities. It may show why a company is in debt and how much debt grows in an accounting period.
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Statement of Cash Flow: Financing Activities
You would list financial transactions related to the actions of investors and shareholders under this section in the statement of cash flows.
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Statement of Cash Flow: Investing Activities
These are activities that detail changes in income related to purchasing or selling large items, including equipment or property.
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Statement of Cash Flow: Operating Activities
These activities reflect things that brought cash into or out of a business during day-to-day operations, such as cash paid by customers, salaries and rent.
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Balance Sheet
This financial document list a company's accounts and the balances of these accounts. The left side shows assets; the right side shows liabilities and owner's equity accounts.
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External Audit
An audit carried out by an auditor who doesn't work for the company being audited. These can be used before selling stock so investors are comfortable with the accuracy of financial information.
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Generally Accepted Accounting Principles (GAAP)
These are guidelines used by accountants. They were set up by the Financial Accounting Standards Board (FASB).
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Auditor
Individuals working in this field will look at a company's financial records.
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Auditors: Main Jobs

Ensure financial statements comply with the guidelines from GAAP

Confirm that financial statements are truthful in reports and notes

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29 cards in set

Flashcard Content Overview

This set of flashcards can help you go over income statements, statements of cash flow, balance sheets and statements of retained earnings. You'll also find cards that address the fundamental principles of accounting. Additionally, these cards give you the chance to focus on external audits and how they are used in accounting.

Front
Back
Auditors: Main Jobs

Ensure financial statements comply with the guidelines from GAAP

Confirm that financial statements are truthful in reports and notes

Auditor
Individuals working in this field will look at a company's financial records.
Generally Accepted Accounting Principles (GAAP)
These are guidelines used by accountants. They were set up by the Financial Accounting Standards Board (FASB).
External Audit
An audit carried out by an auditor who doesn't work for the company being audited. These can be used before selling stock so investors are comfortable with the accuracy of financial information.
Balance Sheet
This financial document list a company's accounts and the balances of these accounts. The left side shows assets; the right side shows liabilities and owner's equity accounts.
Statement of Cash Flow: Operating Activities
These activities reflect things that brought cash into or out of a business during day-to-day operations, such as cash paid by customers, salaries and rent.
Statement of Cash Flow: Investing Activities
These are activities that detail changes in income related to purchasing or selling large items, including equipment or property.
Statement of Cash Flow: Financing Activities
You would list financial transactions related to the actions of investors and shareholders under this section in the statement of cash flows.
Statement of Cash Flow
A financial report with three sections: operating activities, investing activities and financing activities. It may show why a company is in debt and how much debt grows in an accounting period.
Income Statement
Accountants can use this financial report for the easiest way to show if a given company ended up making or losing money in an accounting period.
Income Statement: Total Expenses
This records the sum total of all the money a company pays out. Add up all expenses on the income statement to find this.
Income Statement: Total Revenue
A line on an income statement that records the total amount of money that a company earned in a given period of time. You add all the company's earnings to find this.
Statement of Retained Earnings
Use this financial statement to see how much income a company has after paying out all dividends.
Statement of Retained Earnings: Formula
Retained earnings from the beginning of the period +/- net income or loss - dividends - withdrawals by the owner = ending retained earnings
Balance Sheet: Formula
Assets = company's liabilities + owner's equity
Owner's Equity
This is the term used when speaking about how much money a person has invested in a business personally. If you pay to update the equipment you use for your job, it would be an example of this.
Fundamental Principles of Accounting: Arm's Length Transaction
A principle of accounting that tells us we should only get involved with financial transactions that involve people who aren't related to us.
Fundamental Principles of Accounting: Objectivity
Following this principle of accounting ensures that financial information is well documented so it can be relied on.
Fundamental Principles of Accounting: Separate Entity Principle
You obey this principle of accounting when you ensure your company dealings are handled separately from any personal dealings.
Fundamental Principles of Accounting: Going-Concern
This principle of accounting states that you need to believe that your company will endure as it goes forward.
Fundamental Principles of Accounting
A series of guidelines used to report financial data.
Method of Accounting: Accrual Basis
You use this method of accounting if you record your income as soon as a sale is made and record any expenses as soon as you receive a bill.
Method of Accounting: Cash Basis
A method of accounting that only records income once it is received and that only records expenses after you make a payment.
Subsequent Events
Events that occur after you complete a balance sheet and before you've issued a financial statement. They come in two types, recognized and unrecognized.
Recognized Subsequent Events
These are subsequent events that require you to make some kind of change to your financial statements. Examples could include filing for bankruptcy or issues related to lawsuits.
Unrecognized Subsequent Events
Subsequent events that don't require you to make any changes to your financial statements. If you have an equipment failure, it would be this kind of subsequent event.
Statement of Cash Flows: Cash Outflow Operating Activities
These are operating activities that take cash out of a business. The purchase of supplies and salaries would be examples.
Income Statement: Formula
Net income (or net loss) = revenue - expenses
Income Statement: Investors
These individuals can look at income statements for a comprehensive look at a company's activities. This allows them to determine if a company would make a good partner.

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