Accounting and Financial Statements

Vocabulary flashcards covering business transactions, the accounting equation, financial statements, and their interrelationships.

Financial Statements

Accounting reports prepared for users after transactions have been recorded and summarized.

Primary Financial Statements of a Proprietorship

The four basic financial reports prepared for a proprietorship: the income statement, statement of owner's equity, balance sheet, and statement of cash flows.

Income Statement

A financial statement summarizing the revenue and expenses for a specific period of time, such as a month or a year.

Statement of Owner's Equity

A financial statement summarizing the changes in owner's equity that have occurred during a specific period of time, such as a month or a year.

Balance Sheet

A financial statement listing the assets, liabilities, and owner's equity as of a specific date, usually at the close of the last day of a month or a year.

Statement of Cash Flows

A financial statement summarizing the cash receipts and cash payments for a specific period of time, such as a month or a year.

Net Income

The excess of revenue over expenses; also referred to as net profit or earnings.

Net Loss

The amount by which expenses exceed revenue for a period of time.

Report Form

A balance sheet layout that presents assets, liabilities, and owner's equity in a vertical format.

Account Form

An alternative balance sheet layout that presents assets, liabilities, and owner's equity in a horizontal format.

Cash Flows from Operating Activities

The section of the statement of cash flows reporting a summary of cash receipts and cash payments from business operations.

Cash Flows from Investing Activities

The section of the statement of cash flows reporting cash transactions for the acquisition and sale of relatively permanent assets.

Cash Flows from Financing Activities

The section of the statement of cash flows reporting cash transactions related to cash investments by the owner, borrowings, and owner withdrawals.

Four Types of Transactions Affecting Owner's Equity

Owner's investments (increases owner's equity), owner's withdrawals (decreases owner's equity), revenues (increases owner's equity), and expenses (decreases owner's equity).

Inclusivity

A business practice aimed at ensuring every person has equal rights, support, consideration, and opportunities to achieve their full potential by enacting policies respectful of diverse identities and backgrounds.