AFA100 Introductory Financial Accounting - Key Concepts

These flashcards cover essential concepts related to financial accounting principles, financial statements, and their components as outlined in the AFA100 course notes.

What are the four basic financial statements?

1. Statement of Earnings (Income Statement) 2. Statement of Changes in Equity 3. Statement of Financial Position (Balance Sheet) 4. Statement of Cash Flows

What is the purpose of the Statement of Earnings?

Reports the accountant’s primary measure of performance of a business, showing revenues less expenses during the accounting period.

What does the Statement of Changes in Equity report?

Reports all changes to shareholders’ equity during the accounting period, including contributed capital and retained earnings.

What is the fundamental accounting equation?

Assets = Liabilities + Shareholders’ Equity

What categories are cash flows divided into in the Statement of Cash Flows?

1. Operating activities 2. Investing activities 3. Financing activities

What is the role of International Financial Reporting Standards (IFRS)?

Determining the content of financial statements and ensuring the accuracy required by managers, directors, and auditors.

What is 'Net Earnings'?

Total revenues earned minus total expenses incurred during a specific period.

What are the requirements to continue with the School of Accounting and Finance program?

Obtain a cumulative final grade of 67% or higher.

What is the primary responsibility of management regarding financial statements?

Ensuring the accuracy of financial information and establishing internal controls.

What is the only approved calculator for all SAF accounting courses?

Texas Instruments BA II Plus.

What is contained in 'Notes to Financial Statements'?

Supplemental information about the financial condition of a company, including accounting rules applied and additional financial disclosures.

What are the five principles of ethics for professional accountants?

1. Integrity 2. Objectivity 3. Professional competence and due care 4. Confidentiality 5. Professional behaviour.

What is the importance of accounting standards?

They provide a basis for comparability of financial information and prevent manipulation of values.

What is the significance of auditing in financial accounting?

To ensure the financial reports conform to generally accepted accounting principles.

What do shareholders' equity consist of?

Contributed capital and retained earnings.