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Lesson 4: Financial Statements
Terms in this set (20)
the period of time required to purchase or produce inventory, sell the inventory, and collect cash from the resulting receivables
Assets that are in the form of cash, or will be converted into cash, or consumed within one year or the operating cycle of the business, whichever is longer
Liabilities that are due in the upcoming year or in the operating cycle of the business, whichever is longer, and that will be met through the transfer of a current asset or the creation of another current liability
Long-term assets and long-term liabilities
Assets or Liabilities that do not meet the definition of current
Statement of Stockholders' Equity
This statement presents the changes in contributed capital, additional paid-in capital, and retained earnings
Uses Year ended
Those cash flows related to transactions that flow through the income statement
Cash flows related to the acquisition and disposal of long-term assets and investments (other than cash equivalents and trading securities; these are operating)
—Cash flows related to the liabilities and owners' equity sections of the balance sheet
What approach is used when financial statements are prepared?
The all-inclusive approach
Where and how are prior-period adjustments shown?
They are shown on the statement of retained earnings as adjustments to the beginning balance of retained earnings in the year that the error is discovered.
What are the items in other comprehensive income?
Unrealized gains and losses on investments in securities available for sale, certain pension cost adjustments, foreign currency translation adjustments, and unrealized gains and losses on certain hedging activities
Name the two different formats of presentation for the balance sheet.
How are assets presented on the balance sheet?
Assets are presented in order of decreasing liquidity. The most liquid assets (such as cash) are shown first, and less liquid assets are shown last (such as property, plant, and equipment).
How are liabilities presented on the balance sheet?
Liabilities are shown in order of maturity. Current liabilities are presented first, and then long-term liabilities are presented.
How is owner's equity presented on the balance sheet?
In order of permanence
What are current liabilities?
Liabilities that are due in the upcoming year or the operating cycle of the business, whichever is longer, and which will be met through the transfer of a current asset or the creation of another current liability
How are long-term assets and liabilities defined?
By exclusion from current assets and current liabilities
What is the purpose of the statement of cash flows?
To explain the change in cash and cash equivalents that has occurred during the past accounting year
What are cash equivalents?
Short-term investments that are convertible into a known and fixed amount of cash and have an original maturity to the purchaser of three months or less
What are the categories that are listed on the statement of cash flows?
THIS SET IS OFTEN IN FOLDERS WITH...
Lesson 2: FASB and Standard Setting
Lesson 3: Accrual Accounting
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