24 Cards in this Set
| Front | Back |
|---|---|
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Debit Ratio
|
Total liabilities/ Total assets
|
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Current Ratio
|
Current assets/ Current liabilities
- Higher # = better outcome
|
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Accounting Equation
|
Assets = Liabilities + Equity (owners capital + revenue - expenses)
|
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Going-concern Assumption
|
Business will continue operating
|
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Monetary Unit Assumption
|
Express transactions & events
|
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Business Entity Assumption
|
Multiple jobs viewed separately
|
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Time Period Assumption
|
Time periods of a company (annual, monthly & yearly)
|
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Cost Principle
|
Accounting information based on actual cost. Actual cost is considered objective.
|
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Revenue Recognition
|
1. Recognize when its earned 2. Proceeds need to be in cash 3. Measure revenue cash received - plus cash value of items received
|
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Matching Principle
|
A company records its expenses incurred to generate the revenue reported
|
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Full Disclosure Principle
|
Company required to report the details behind financial statements that would impact user's decisions
|
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Statement of cash flow
|
Identifies cash flows (receipts) and cash outflows (payments) over a period of time
|
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Income Statement
|
Describes a company's revenue and expenses along with the resulting net income/loss over a period of time due to earnings activities
|
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General Ledger
|
A record containing all accounts used by the company
|
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Ledger
|
Collection of all accounts for an information system. A company's size and diversity of operations affect the number of accounts needed.
|
|
T Account
|
Represents a ledger account and is a tool used to understand the effects of one or more transactions
|
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Trial Balance
|
List all accounts balances in the general ledger. If in balance, the total debits will equal the total credit.
|
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Account
|
Record of increases and decreased in a specific asset, liability, equity, revenue, or expense item
|
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Deferrals
|
Cash is exchanged before revenue is earned or expenses are incurred (non-GAAP)
|
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Accurial Basis
|
Revenue is earned and expenses are incurred before cash is exchanged (most optimal, GAAP)
|
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Cash Basis
|
Accounting dictates that revenues be recognized when the cash is actually received and that exp
|
|
Sabanes-oxley
|
Congress passed, to help curb financial abuses of companies that issue their stock to the public
|
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FASB/IASB
|
Group of people who formulates GAAP
|
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Owner's Equity
|
Capital + net income = x - withdrawals
|
RETL 261: Exam 2