💰Financial Accounting & Performance Dashboard

studying

Liabilities (debts & expenses) + Equity (

=Assets (resources)

The entire group of accounts maintained by a company is called the

General Ledger

Expenses incurred but not yet paid or recorded are called

Accrued Expenses

Analyze, Journalize, Post

Steps in the Recording Process

assets should be accounted and recorded at the original cost (no matter appreciation or depreciation)

Historical principle/ Cost principle

financial information is capable of making a difference in a decision ( how helpful the information is)

Relevance

requires that companies include in the accounting records only transaction data that can be expressed in money terms

Monetary unit assumption

requires that the activities of the entity be kept separate and distinct from the activities of its owner

Economic Entity Assumption

cash

Current Assets

PPE

describes the amounts paid in by shareholders for the ordinary shares they purchase

Share capital - ordinary

the gross increases in equity resulting from business activities entered into for the purpose of earning income.

Revenues

the cost of assets consumed or services used in the process of earning revenue

Expenses

distribution of cash or other assets to shareholders. They are not an expense

Dividends

presents the revenues, expenses and resulting net income or net loss, for a specific period of time

Income statement

summarizes the changes in retained earnings for a specific period of time

Retained earnings statement

reports the assets, liabilities, and equity of a company at a specific date (sometimes referred to as a balance sheet)

Statement of financial position

summarizes information about the cash flows (receipts) and outflows (payments) for a specific period of time

Statement of cash flows

presents other comprehensive income items that are not included in the determination of net income in 1

Comprehensive income statement

Income Statement→ Retained Earnings Statement→ Statement of Financial Position→Statement of Cash Flows

Financial Statement Connections

When revenues exceed expenses,__________ results

net income

when expenses exceed revenues, a ________ results

net loss