Ch 14 Flashcards

1
Q

Accounting

A

The recording classifying, summarizing, and interpreting of financial events and transactions in an organization to provide management and other interested parties the financial information they need to make good decisions about its operation

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2
Q

Accounting cycle

A

A 6 step procedure that results in the preparation and analysis of the major financial statements

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3
Q

Bookkeeping

A

The recording of business transactions

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4
Q

Double entry bookkeeping

A

Practice of writing every business transaction in 2 place

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5
Q

Ledger

A

A specialized accounting book or computer program in which the information from accounting journals is accumulated into specific categories and posted so that managers can find all the information about one account in the same place

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6
Q

Trial balance

A

Summary of all the financial data in the account ledger that ensures the figures are correct and balance.

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7
Q

financial statement

A

summary of all the financial transactions that have occurred over a particular period

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8
Q

Balance sheet

A

The financial statement that reports a firms financial conditions at a specific time

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9
Q

Assets

A

economic resources owned by a firm

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10
Q

Liquidity

A

The ease with which an asset can be converted into cash

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11
Q

current assets

A

items that can or will be converted into cash within one year

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12
Q

Fixed assets

A

Longterm assets that are relatively permanent, such as Land, buildings, and equipment

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13
Q

intangible assets

A

Longterm assets that have no physical form but do have value (examples: patents, trademarks, copyrights)

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14
Q

Liabilities

A

What the business owe to others (debt)

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15
Q

Accounts payable

A

Current liabilities or bills the company owes others for merchandise or services it purchased on credit but has not yet paid for.

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16
Q

Notes payable

A

Short term or long term liabilities that a business promises to repay by a certain date.

17
Q

Bonds payable

A

Long term liabilities, money lent to the firm by bondholders that it must pay back at a specific date

18
Q

Owners equity

A

Amount of the business that belongs to the owners minus any liabilities owned by the business

19
Q

Retained earnings

A

Accumulated earnings from the firm’s profitable operations that are reinvested in the business and not paid out to stockholders in distributions of company profits.

20
Q

Income statement

A

Financial statement that shows a firm’s profit after cost expenses and taxes; it’s summarises all of the resources that have come into the firm (revenue) , all the resources that have left the firm, expenses, and the resulting net income of a net loss

21
Q

Cost of goods sold (or cost of goods manufactured)

A

Measures the cost of merchandise the firm sells, or the cost of raw material and supplies it used in producing items for resale

22
Q

Gross profit (or gross margin)

A

How much a business earned by buying (or making) and selling merchandise

23
Q

Operating expenses

A

Cost involved in operating a business, such as rent, utilities, and salaries

24
Q

Depreciation

A

Systematic ride off of the cost of a tangible asset over its estimated useful life

25
Statement of cash flow
Financial statement that reports cash receipts and disbursement related to the firm's 3 major activities: operation, investment, and financing
26
cash flow
The difference between cash coming in and cash going out of her business
27
financial accounting
Generates financial information and analyses is for people primarily outside the organization
28
Annual report
A yearly statement of the financial condition, progress, and expectations of an organization
29
private accountant
Accountant who works for a single firm government agency or nonprofit organization
30
Public accountant
Provides accounting services to individuals or business on a fee basis
31
Certified public accountant (CPA)
An accountant who passes a series of examinations established by the American Institute of Certified Public Accountants (AICPA)
32
Managerial accounting
Provides information and analysis to managers inside the organization to assist them in decision making
33
Auditing
Job of reviewing and evaluating the information used to prepare a company's financial statements
34
Independent audit
An evaluation and unbiased opinion about the accuracy of a company's financial statements
35
Tax accountant
Trained in tax law and is responsible for preparing tax returns or developing tax strategies
36
Government and nonprofit accounting
Accounting system for organizations whose purpose is not generating a profit but serving ratepayers, taxpayers, and others according to a duly approved budget
37
fundamental accounting equation
Assets=Liabilities+Owners equity, the basis for the balance sheet
38
Journal
The record book or computer program where accounting data is first entered
39
Net income or net loss
Revenue leftover after all costs and expenses including taxes are paid