Accounting - Chapter 2
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Mostly focus on Historical Cost Principle
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10 Terms
What does “Foreseable future” mean?
In one year
Current Assets will be used or turned into cash within…
One Year
Long Term Assets will be used or turned into cash within…
More than one year
Liabilities
Debts or Obligations of the entity that result from past transactions, which will be paid with assets or services
Current Liabilities are obligations that will be settled by providing cash, goods, or services within…
One Year
Long Term Liabilities are obligations that will be settled by providing cash, goods, or services within…
More than One Year
Stockholders Equity (Also called owners equity or shareholders equity) are…
Two major forms of financing provided by the owners and business operations
Contributed Capital is
A form of stockholders equity, and is a result from owners providing cash (and sometimes other assets) to the business.
These owners invest and receive shares of stock
Why do people invest?
Hope to benefit in two ways:
Receipts of dividends (a distribution of the companies earnings, which is a return on the shareholders investment
Gains from selling the stock for more than they paid (also called capital gains)
Retained Earnings is…
A type of stockholders equity, It is a earned capital. It refers to the cumulative earnings of a company that are not distributed to the owners and are reinvested in the business