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Financial Accounting Key Concepts

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이 집합의 용어 (13)

  • What is Financial Accounting?

    The branch of accounting that provides relevant and accurate information to people outside the firm.

  • What is the Historical Cost Principle?

    The Historical Cost Principle states that assets should be recorded at their original purchase cost, not their current market value.

  • What is an Asset?

    An Asset is a resource owned by a business that is expected to provide future economic benefits.

  • What is a Liability?

    A Liability is a present obligation of the business to transfer assets or provide services in the future.

  • What is Owner's Equity?

    Owner’s Equity represents the owner's claims on the assets after all liabilities are deducted.

  • State the Accounting Equation.

    The Accounting Equation is \(Assets = Liabilities + Owner\'s\ Equity\).

  • What are Retained Earnings?

    Retained Earnings are the cumulative net income kept in the business after dividends are paid.

  • What are Dividends?

    Dividends are distributions of earnings to shareholders or owners.

  • What is Net Income?

    Net Income is the profit remaining after all expenses are subtracted from revenues.

  • What is the Income Statement Formula?

    Revenue - Expenses = Net Income

  • What is the formula for the Statement of Retained Earnings?

    Begining R/E + Net Income - Dividends = Ending R/E

  • What is the Balance Sheet formula?

    Assets = Liabilities + Owner's Equity

  • Define Current Assets.

    Current Assets are assets expected to be converted to cash or used within one year.