Financial accounting is an information system that:
tracks and records an organization's business transactions
Choose the word that best completes the following sentence: In financial accounting, an organization's business transactions are classified into operating activities, _________ activities and financing activities.
Since auditors have to attest to the validity of a company's financial statements, what is an important characteristic for an auditor from the following choices?
A balance sheet, also called a statement of financial position, is a report of the organization's financial situation at a particular point in time. It lists the entity's assets, liabilities and owners' equity. It is called a balance sheet because it reports the balance or amount in each asset, liability and owners' equity account.
The income statement details the entity's operating performance during a specific period of time, known as the accounting period, displayed at the top of the statement. In this income statement for Global Grocer, the accounting period is the month of September 2004.
The income statement lists the revenues earned and expenses incurred during the period; subtracting expenses from revenues results in the measurement of net income for the period.
The statement of cash flows details the sources and uses of cash by the entity over an accounting period. For the convenience of financial statement users, the statement of cash flows is organized by type of business activity: operating, investing and financing.
The entity concept is the most basic accounting concept. It states that accounts are kept for an entity as distinct from the people who own, run or do business with the entity.
The entity concept is simple but powerful. It allows the accountant to draw a virtual boundary around the entity and hence limit the activities that need to be tracked and recorded.
The money measurement concept states that financial...