Financial Lit Study Guide

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What is Accounting? (IRCS-C)

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6 Terms

1

What is Accounting? (IRCS-C)

Interpret, Record, Classify, Summarize, Communicate

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2

5 Types of Accounts (REAL-E)

Assets, Liabilities, Equity, Revenues, Expenses

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3

4 Financial Statements (BICS)

Balance Sheet, Income Statement,Cash Flow Statement, Statement of Owner's Equity

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4

What Goes on a Balance Sheet?

reports a business’s assets, liabilities and equity at a specific point in time.

broken into two main sections: assets on one side and liabilities and equity on the other side.

require the two sides must balance out, meaning they should be equal to one another.

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5

What Goes on an Income Statement?

(also called a “profit and loss statement”) lists a business’s revenues, expenses and net profit (or loss) for a specific period of time.

The end goal is to show a business’s net income for a specific reporting period.

positive = profit, negative = loss

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6

What’s the Difference between a income statement and a balance sheet?

They both report different financial accounting information about your business. The key differences between the two reports are the Line Items Reported:

Income statement reports revenue, expenses and profit (or loss)

Balance sheet reports assets, liabilities and shareholder equity.

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