UFS lecture 1 flashcards

flashcards based on the first lecture slides

What is accounting?

The systematic recording, reporting, and analysis of quantitative financial transactions of a business.

List the activities of accounting.

Planning what to gather, gathering the information, processing the information, providing the information, explaining the information.

What are the main financial statements?

Balance sheet (SFP), Income statement (SOCI), Statement of changes in equity, Statement of cash flows, Notes.

Define a sole trader.

Owned and managed by one individual; the owner takes all profit and is personally responsible for debts.

What characterizes partnerships?

Owned by more than one individual; profit is shared, and decision-making is more complicated.

Describe companies in accounting terms.

Owned by shareholders with limited liability; managed by a board of directors and subject to numerous compliance requirements.

What is the separate entity concept?

Separation of business and personal wealth; limited means of transfer between personal and business assets.

Who needs accounting information?

Stakeholders include investors, creditors, employees, management, government, suppliers, customers, and competitors.

What are the two main types of accounting?

Financial accounting and Management accounting.

How does financial accounting differ from management accounting?

Financial accounting is governed by law and standards for external users, while management accounting addresses internal needs.

What are the qualitative characteristics of accounting information?

Relevance, faithful representation, comparability, verifiability, timeliness, understandability.

What is an asset?

A present economic resource controlled by the entity as a result of past events.

Define liability in accounting.

A present obligation of the entity to transfer an economic resource as a result of past events.

What is equity?

The residual interest in the assets of the entity after deducting all its liabilities.

What is the accounting equation?

Assets = Owners' equity + Liabilities.

What differentiates current assets from non-current assets?

Current assets are expected to be realized or consumed within twelve months, while non-current assets are not.