professionalintermediate
Financial Accounting Basics
Fundamental accounting principles and financial statement analysis
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Card 1
What is the accounting equation?
Assets = Liabilities + Equity. This fundamental equation must always balance. Basis of double-entry bookkeeping.
Card 2
What are the three main financial statements?
Balance Sheet (financial position), Income Statement (profitability), Cash Flow Statement (cash movements).
Card 3
What is the difference between revenue and profit?
Revenue is total income from sales. Profit is revenue minus all expenses (Net Income = Revenue - Expenses).
Card 4
What is depreciation?
The systematic allocation of an asset's cost over its useful life. Reflects wear and tear, obsolescence. Non-cash expense.
Card 5
What is the difference between accrual and cash accounting?
Accrual: records when earned/incurred. Cash: records when money changes hands. Accrual gives more accurate financial picture.
Card 6
What is GAAP?