CFAS (Financial Statements)

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32 Terms

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1. STATEMENT OF FINANCIAL POSITION
2. STATEMENT OF FINANCIAL PERFORMANCE
3. STATEMENT OF CASH FLOWS.
4. STATEMENT OF OWNER'S EQUITY
5. NOTES TO FS
5 General purpose of FS
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Accounting Concept: Adequate Disclosure
Businesses communicate financial information to the public
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Elements
The items reported in the FS are organized into classes or categories known as
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1. Assets
2. Liabilities
3. Equity
4. Common Stocks
5. Revenue
6. Expenses
7. Distributions
8. Net income
9. Gains
10. Losses
Ten elements of financial statements
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Accounts
Elements represent broad classifications as opposed to specific items; the sub classifications of elements
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Ledger
Called as the group of accounts
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General Ledger
Contains all accounts needed to prepare FS
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Chart of accounts
Accounts are listed in the ____________________ and assigned an account number
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File Maintenance
The procedure for arranging accounts, assigning account numbers, and keeping records current.
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Account numbers
____________ are assigned based on the account’s location in the general ledger
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Existing accounts
These are numbered by 10’s to allow room for new accounts to be added
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F

ASSETS are organized by liquidity
T/F

Expenses are organized by liquidity
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True
T/F

Liabilities and Expenses are listed alphabetically
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capital, drawings
These are owner’s equity
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Revenue
Sales are part of what account?
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1. Income statements
2. Balance sheet
3. Statement of Owner’s Equity
4. Statement of Cash Flows
4 common reports of Financial Statements
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Income Statement
The report of a company’s operating performance, in financial terms, over a period of time
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1. Revenue
2. Costs of goods sold
3. Gross profit
4. Operating expenses
5. Net income or net loss
5 major sections of report information
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F

Income statement has 3-line heading
T/F

Income statement has 2-line heading
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specified period of time
The income statement of reporting is for a ____________
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Accounting period
The time period covered by the financial statements is called the ____________
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1. Revenue
2. Expenses
3. Gross profit on sales
4. Operating Expenses
5. Net income
Elements of an income statement
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Sales/Revenue
Earnings from the sale of goods or the performance of service
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Sales return and Allowances
The refunds or adjustments for unsatisfactory merchandise or service
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Gross profit on sales
The difference between the net sales and the cost of goods sold
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F

Use a SINGLE underline for subtotals. Double underline for final totals
T/F

Use a double underline for subtotals
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Statement of Owner’s Equity
Also referred to as Statement of Stockholder's equity and Statement of Retained Earnings.
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ending capital + sales - expenses
This is how to calculate Owner’s Equity on the balance sheet
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Balance sheet
Describes the financial situation of a company at a specific point in time.
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1. Name of business
2. Name of Financial Statement
3. Specific date
Heading of balance sheet
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1. To show the assets owned by a company.
2. To show the liabilities owed by a company.
3. To represent a company’s net worth.
Purpose of a Balance Sheet
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TRUE
T/F

The relationship among the financial statements is imperative to understanding the components of each statement.