Financial Accounting 101
stockholders - ANSWER > sole owners of a company
creditor - ANSWER > lending to a company; make money on loans by charging interest
dividends - ANSWER > portion of what the company earned in the form of cash payments
managers - ANSWER > internal decision makers
creditors and stockholders - ANSWER > external decision makers
accounting - ANSWER > a system that collects and processes (analyzes, measures, records)
financial information about an organization and reports that information to decision makers
business activities - ANSWER > financing activities, investing activities, operating activities
financing activities - ANSWER > borrowing of paying money back to lenders and receiving
additional funds from stockholders or paying them dividends (Le-Nature's example)
investing activities - ANSWER > buying or selling items such as plant and equipment used in
the production of beverages (Le-Nature's example)
operating activities - ANSWER > the day to day process of purchasing raw tea and other
ingredients from suppliers, manufacturing beverages, delivering them to customers, collecting
cash from customers, and paying suppliers
, supply chain managers - ANSWER > analyze suppliers' financial statements to see whether the
suppliers have the resources to meet demand and invest in future development
human resource managers - ANSWER > use financial statements as a basis for contract
negotiations over pay rates
four basic financial statements - ANSWER > balance sheet, income statement, statement of
stockholders' equity, statement of cash flow
can be prepared at any point in time (year, quarter, month) and can apply to any time span (one
year, one quarter, one month)
quarterly reports - ANSWER > financial statements for external users (investors and creditors)
at the end of each quarter
annual reports - ANSWER > financial statements for external users (investors and creditors) at
the end of the year
balance sheet - ANSWER > reports amount of assets, liabilities, and stockholders' equity of any
accounting equity at one point in time
structure of a balance sheet - ANSWER > 1. name of entity
2. title of the statement
3. specific date of the statement
4. unit of measurement
accounting entity - ANSWER > organization for which financial data are to be collected
stockholders - ANSWER > sole owners of a company
creditor - ANSWER > lending to a company; make money on loans by charging interest
dividends - ANSWER > portion of what the company earned in the form of cash payments
managers - ANSWER > internal decision makers
creditors and stockholders - ANSWER > external decision makers
accounting - ANSWER > a system that collects and processes (analyzes, measures, records)
financial information about an organization and reports that information to decision makers
business activities - ANSWER > financing activities, investing activities, operating activities
financing activities - ANSWER > borrowing of paying money back to lenders and receiving
additional funds from stockholders or paying them dividends (Le-Nature's example)
investing activities - ANSWER > buying or selling items such as plant and equipment used in
the production of beverages (Le-Nature's example)
operating activities - ANSWER > the day to day process of purchasing raw tea and other
ingredients from suppliers, manufacturing beverages, delivering them to customers, collecting
cash from customers, and paying suppliers
, supply chain managers - ANSWER > analyze suppliers' financial statements to see whether the
suppliers have the resources to meet demand and invest in future development
human resource managers - ANSWER > use financial statements as a basis for contract
negotiations over pay rates
four basic financial statements - ANSWER > balance sheet, income statement, statement of
stockholders' equity, statement of cash flow
can be prepared at any point in time (year, quarter, month) and can apply to any time span (one
year, one quarter, one month)
quarterly reports - ANSWER > financial statements for external users (investors and creditors)
at the end of each quarter
annual reports - ANSWER > financial statements for external users (investors and creditors) at
the end of the year
balance sheet - ANSWER > reports amount of assets, liabilities, and stockholders' equity of any
accounting equity at one point in time
structure of a balance sheet - ANSWER > 1. name of entity
2. title of the statement
3. specific date of the statement
4. unit of measurement
accounting entity - ANSWER > organization for which financial data are to be collected
