Financial Accounting Ch 1

Card Set Information

Financial Accounting Ch 1
2012-11-20 14:19:14


Some basics from the first chapter. A building block for later chapters.
Show Answers:

  1. What are the 4 Major financial statements?
    • 1. Income Statement
    • 2. Statement of Stockholders' Equity
    • 3. Balance Sheet
    • 4. Statement of Cash Flows
  2. What is the Income Statements provide?
    • A company's evenues and expenses over an interval of time.
    • Revenues - Expenses = Net Income (or Net Loss)
  3. What is on an Income Statement?
    • Revenue
    • Expenses
    • Net Income
  4. How can I tell if a company is profitable?
    Look at the Income Statement.
  5. What does the Statement of Stockhholders' Equityprovide?
    It summarizes the changes in stockholders' equity over an interval of time.
  6. What are the two promary components of Stockholders' Equity?
    • Common Stock
    • Retained Earnings
  7. Is common stock an internal or external source of stockholders' equity?
  8. Is Retained Earnings an internal or an external form of stockholders' equity
  9. What does Retained Earnings reqresent?
    the cumulative amound of net income.
  10. What on the "Statement of Stockholders' Equity" comes from the "Income Statement"?
    Net Income (for the time period)
  11. What three catagories are on the Statement of Stockholders' Equity?
    • Common Stock
    • Retained Earnings
    • Total Stockholders' Equity
  12. What lines are on the Statement of Stockholders' Equity?
    • Beginning Balance
    • Issuance of Common Stock
    • Add: Net Income
    • Less: Dividends
    • Ending Balance
  13. How would a company increase its value from an outside source?
    Selling of Common Stock
  14. How would a company increase value from an internal source?
    When profits exceed dividends payed.
  15. What does a balance sheet give us?
    It presents the financial position of a company on a particular date. (a snap-shot)
  16. What is the accounting equation used on the "Balance Sheet?"
    • Assets = Liabilities + Stockholders' Equity
    • Assets - Liabilities = Stockholders' Equity
  17. What are the three major parts of a "Balance Sheet"?
    • Assets
    • Liabilities
    • Stockholders' Equity
  18. What does the "Statement of Cash Flows" give us?
    it measures activities involving cash receipts and cash payments over an interval of time.
  19. What are the three categories that cash flows are linked to?
    • Operating Cash Flows
    • Investing Cash Flows
    • Financing Cash Flows
  20. What two transactions are included within Operating Cash Flows?
    • Revenues
    • Expenses
  21. Long-term assets would be part of which cash flow category?
    Investing Cash Flow
  22. Which cashflow category would include borrowing money or repaying debt?
    Financing Cash Flow
  23. Which cash flow category would include issuing stock or paying dividends?
    Financing Cash Flow
  24. What are the two main functions accountin serves in our society?
    • Measures business activities
    • Communicates those measuresments to investors and creditors
  25. What does GAAP stand for?
    general accepted accounting principles
  26. What does FASB stand for?
    Financial Accounting Standards Board
  27. What does the FASB do?
    It establishes financial accounting and reporting standards in the United States primarily.
  28. What does the IASB stand for?
    International Accounting Standards Board