Chapter 17 VOCAB Flashcards

(49 cards)

1
Q

measuring, interpreting, and communicating financial information to support internal and external decision making

A

accounting

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2
Q

area of accounting concerned with preparing financial information for users outside the organization

A

financial accounting

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3
Q

area of accounting concerned with preparing data for use by managers within the organization

A

management accounting

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4
Q

recordkeeping; the clerical aspect of accounting

A

bookkeeping

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5
Q

in-house accountants employed by organizations and businesses other than a public accounting firm

A

private accountants; also called corporate accountants

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6
Q

highest-ranking accountant in a company, responsible for overseeing all accounting functions

A

controller

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7
Q

professionally licensed accountants who meet certain requirements for education and experience and who pass a comprehensive examination

A

certified public accountants (CPAs)

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8
Q

professionals who provide accounting services to to other businesses and individuals for a fee

A

public accountants

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9
Q

formal evaluation of the fairness and reliability of a client’s financial statements

A

audit

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10
Q

U.S. standards and practices used by accountants in the preparation of financial statements

A

generally accepted accounting principles (GAAP)

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11
Q

independent accounting firms that provide auditing services for public companies

A

external auditors

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12
Q

accounting standards and practices used in many countries outside the United States

A

international financial reporting standards (IFRS)

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13
Q

informal name of comprehensive legislation designed to improve integrity and accountability of financial information

A

Sarbanes-Oxley

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14
Q

any things of value owned or leased by a business

A

assets

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15
Q

claims against a firm’s assets by creditors

A

liabilities

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16
Q

portion of a company’s assets that belongs to the owners after obligations to all creditors have been met

A

owner’s equity

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17
Q

basic accounting equation stating that assets equal liabilities plus owner’s equity

A

accounting equation

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18
Q

method of recording financial transactions requiring two offsetting entries for every transaction to ensure that the accounting equation is always kept in balance

A

double-entry bookkeeping

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19
Q

fundamental principle requiring that expenses incurred in producing revenue be deducted from the revenues they generate during an accounting period

A

matching principle

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20
Q

accounting method in which revenue is recorded when a sale is made and expense is recorded when it is incurred

A

accrual basis

21
Q

accounitng method in which revenue is recorded when payment is received and expense is recorded when cash is paid

22
Q

accounting procedure for systematically spreading the cost of a tangible asset over its estimated useful life

23
Q

transferring net revenue and expense account balances to retained earnings for the period

A

closing the books

24
Q

statement of a firm’s financial position on a particular date

A

balance sheet; also known as a statement of financial position

25
twelve-month accounting period that begins on January 1 and ends on December 31
calendar year
26
any 12 consecutive months used as an accounting period
fiscal year
27
cash and items that can be turned into cash within one year
current assets
28
assets retained for long-term use, such as land, buildings, machinery, and equipment
fixed assets; also referred to as property, plant, and equipment
29
obligations that must be met within a year
current liabilities
30
obligations that fall due more than a year from the date of the balance sheet
long-term liabilities
31
the portion of shareholders' equity earned by the company but not distributed to its owners in the form of dividends
retained earnings
32
financial record of a company's revenues, expenses, and profits over a given period of time
income statement; also known as profit-and-loss statement
33
costs created in the process of generating revenues
expenses
34
profit earned or loss incurred by a firm, determined by subtracting expenses from revenues
net income; causally referred to as the bottom line
35
cost of producing or acquiring a company's products for sale during a given period
cost of goods sold
36
amount remaining when the cost of goods sold is deducted from net sales
gross profit; also known as gross margin
37
all costs of operation that are not included under cost of goods sold
operating expenses
38
earnings before interest, taxes, depreciation, and amortization; a simpler and more direct measure of income
EBITDA
39
statement of a firm's cash receipts and cash payments that presents information on its sources and uses of cash
statement of cash flow
40
ratio between net income after taxes and net sales
return on sales; also known as profit margin
41
ratio between net income after taxes and total owners' equity
return on equity
42
measure of a firm's profitability for each share of outstanding stock, calculated by dividing net income after taxes by the average number of shares of common stock outstanding
earnings per share
43
current assets minus current liabilities
working capital
44
measure of a firm's short-term liquidity, calculated by dividing current assets by current liabilities
current ratio
45
measure of a firm's short-term liquidity, calculated by adding cash, marketable securities, and receivables, then dividing that sum by current liabilities
quick ratio; also known as acid-test ratio
46
measure of the time a company takes to turn its inventory into sales, calculated by dividing cost of goods sold by the average value of inventory for a period
inventory turnover ratio
47
measure of time a company takes to turn its accounts receivable into cash, calculated by dividing sales by the average value of accounts receivable for a period
accounts receivable turnover ratio
48
measure of the extent to which a business is financed by debt as opposed to invested in capital, calculated by dividing the company's total liabilities by owner's equity
debt-to-equity ratio
49
measure of a firm's ability to carry long-term debt, calculated by dividing total liabilities by total assets
debt-to-assets ratio