Business Decisions and Financial Accounting

These flashcards encompass key vocabulary and concepts related to business decisions and financial accounting as presented in the lecture notes.

Accounting

A system of analyzing, recording, summarizing, and reporting the results of a business’s activities.

Revenues

The income generated from normal business operations.

Expenses

The costs incurred in the process of generating revenues.

Net Income

The difference between revenues and expenses.

Dividends

Distributions of a company's earnings to its stockholders as a return on their investment.

Financial Statements

Formal records of the financial activities of a business, including the income statement, balance sheet, statement of retained earnings, and statement of cash flows.

Assets

Resources owned by a company that have economic value.

Liabilities

Resources owed by a company to creditors.

Stockholders' Equity

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

The Basic Accounting Equation

Assets = Liabilities + Stockholders' Equity.

Income Statement

A financial statement that reports a company's revenues and expenses, resulting in net income or loss over a specific period.

Balance Sheet

A financial statement that presents the company's assets, liabilities, and stockholders' equity at a specific point in time.

Statement of Retained Earnings

A financial statement that shows how retained earnings have changed over a specific period.

Statement of Cash Flows

A financial statement that provides aggregate data regarding all cash inflows and cash outflows a company receives.

Operating Activities

Cash flows from the primary revenue-generating activities of the company.

Investing Activities

Cash flows from the purchase and sale of physical and financial investments.

Financing Activities

Cash flows related to borrowing and the equity financing of a company.