Accounting Basics Flashcards

Flashcards for Accounting Basics Review

Accounting Service

Financial information about a business entity provided to decision-makers to increase efficiency.

Financial Accounting

Classifying, recording, presenting monetary transactions, and analyzing, supplementing, communicating information.

Bookkeeping

Recording and classifying monetary transactions in financial records.

Management Accounting

Providing information to management to enhance processes; includes performance reports and variance analysis.

Cost Accounting

Recording, classification, allocation, and reporting of current and prospective costs; used as a basis for pricing.

Tax Accounting

Preparation and filing of tax forms.

Auditing

Verifying accounting records.

Typical Question in Finance Area

Which costs do I have? What is profitable (product, client)? Drivers?

What is the minimum price?

Minimum price for covering the costs.

Financial Accounting Statements

Statement of profit or loss (profit/loss), Statement of financial position (business owings), Statement of changes in equity (dividend, retained earnings), Statement of cash flows (cash received, cash paid).

Assets

Ownings of the firm; resources available to the business providing future economic benefit; can be current (

Liabilities

The obligations of the business; can be current (

Capital/Owners' Equity

An obligation to the owners; Capital + Reserves (retained earnings) - Dividends/drawings.

Income

Earnings/revenues of a business (in cash terms or as a receivable).

Expenses

Costs incurred in running a business.

Non-Current Assets Examples

Buildings, land, office furniture, motor vehicles.

Current Assets Examples

Bank, cash, accounts receivables, inventory.

Non-Current Liabilities Examples

Bank loan (mortgage), debenture bonds.

Current Liabilities Examples

Trade payables, overdraft.

Expenses Examples

Motor expenses, purchases of goods, telephone expenses, salaries & wages, interest expenses.

Income Examples

Sales income, interest income, gain on sale of assets.

Shareholders/Managers goals

Shareholder value, Profit.

Employees goals

Remuneration, safe working environment.

Customers goals

Increased personal utility consuming products/services, business continues reclamations.

Shareholders/Managers decisions

Buying/Selling parts of the company (shares), strategy - Investments, Prices.

Employees decisions

Start/end working contract.

Customers decisions

Buying products/services.

Suppliers goals

Profit from doing business with the company, stable and creditworthy company.

Lenders goals

Interest payments/repayment of loan, stable and creditworthy company.

Suppliers decisions

Delivery conditions, start/end contract.

Lenders decisions

Credit allocation, credit conditions.

Government/General Public goals

Tax payments, GDP growth, employment, legal standards, public promotion.

Government/General Public decisions

Legal standards.