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Pharmacy Administration, Leadership, and Management > Chapter 7: Introduction to Accounting > Flashcards

Chapter 7: Introduction to Accounting Flashcards

1
Q

an art of recording, classifying and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least, of financial character and interpreting the results thereof

A

Accounting

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2
Q

considered as the language of business because it serves as the medium of communication between a business firm and other parties interested in its financial activities

A

accounting

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3
Q

these are properties or rights on property owned by the business and upon which the business has a vested equitable interest

A

Assets

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4
Q

these include cash and other assets that are expected to become cash or to be sold or consumed during the regular operating cycle of the business for one year

A

Current Assets

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5
Q

this includes coins, currencies, money orders, bank checks, bank deposits, and other cash accounts that are available for business operations

A

Cash

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6
Q

termed to the cash in the office premises

A

Cash on hand

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7
Q

termed to the cash deposited in the bank

A

Cash in Bank

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8
Q

collectibles from customers, clients, and other persons for money, goods, or services provided by the business on a credit basis. It has no added interest.

A

Accounts receivable

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9
Q

collectibles from customers/clients, who issue promissory notes in exchange for goods and services received, and as evidence of their obligation to pay the business. It has an added interest

A

Notes receivable

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10
Q

added collectibles from notes receivables

A

Interest receivable

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11
Q

the available stock and goods to be sold to consumers/customers

A

Merchandise inventory

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12
Q

advance payments made for benefits or services that the business will receive or use in the future

A

Prepaid expenses

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13
Q

investments in stocks of other companies. Can be sold to other parties in exchange for additional cash. These assets gain profits in the form of dividends

A

Trading Securities

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14
Q

needed to support the operation of the business over a long period of time

A

Non-current Assets, Plant Assets, or Fixed Assets

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15
Q

real estate owned and used by the business

A

Land

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16
Q

any structure constructed or acquired for use in the business as office, store, or warehouse

A

Building

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17
Q

involves equipment used in offices such as cabinets, computers, cash registers, biorefs, etc.

A

Equipment

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18
Q

include tables, chairs, desks, counters, showcases, cabinets, and anything placed on the floor. Fixtures are off the wall or hung on the ceiling.

A

Furniture and Fixtures

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19
Q

a self-propelled vehicle that does not operate on rails and is used to transport people or goods

A

Motor vehicle

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20
Q

all assets classified as fixed/plant assets except land are subject to depreciation - a system of allocating the cost of a particular asset over its useful life

A

Allowance for Depreciation

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21
Q

these are non-monetary and immaterial assets that are held for the production of goods, rental, or administration to others

A

Intangible assets

  • patent
  • copyright
  • goodwill
  • franchise
  • trademark
  • license
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22
Q

obligations resulting from past transactions/activities and whose settlement will cause an outflow from the resources of the business. These are debts owing to creditors for assets or services acquired in the past with the promise to pay at some future time.
Usually identified with the word Payable

A

Liabilities

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23
Q

debts or obligations that have an expected payment due within the regular operating cycle of a single year

A

Current liabilities

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24
Q

obligation or debts to creditors that are not evidenced by a written promise to pay

A

Accounts payable

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25
Q

the unpaid promissory notes given to creditors for money borrowed, merchandise and/or assets bought on credit

A

Notes payable

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26
Q

amounts owed to employees for services they have already rendered

A

Salaries payable

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27
Q

interest incurred in the current period but is not yet paid

A

Interest payable

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28
Q

expenses from the current period that have yet to be paid as of the balance sheet date

A

Taxes payable

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29
Q

liabilities to pay utility companies for telephone, electricity, and water services used by the business

A

Utilities payable

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30
Q

amount of promissory notes that have not been repaid

A

Notes payable

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31
Q

amounts borrowed by the business from banks or financial institutions

A

Loans payable

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32
Q

a business’ long term debt for which property has been given as security or collateral

A

Mortgage payable

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33
Q

long term contracts of indebtedness payable usually from 5-10 yrs.

A

Bonds payable

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34
Q

excess of assets over liabilities of the business, the single owner’s total equity in the firm’s assets. It is synonymous with the terms owner’s capital, net asset, and net worth, this represents the claim of the owner over the assets of the business after the liabilities have beeen deducted

A

Owner’s Equity

35
Q

this account title is used to record the investment or share of the owner in a business

A

Owner’s Capital/Capital

36
Q

the account used in recording the withdrawals of capital by the owner for personal use

A

Drawing/Owner’s personal

37
Q

represent the inflow of cash or other assets from clients or customers for services performed or for good sold by the business

A

Revenues or Income

38
Q

represents the total sale price of the merchandise sold

A

Sales or Merchandise Sales

39
Q

appropriate title used by the doctors, lawyers, accountants, engineers, and the like in practicing their profession

A

Revenue from fees

40
Q

the rental earned on the properties of the business

A

Rent income

41
Q

an appropriate title for income derived from enterprise selling services, instead of merchandise or products

A

Service income

42
Q

the amount earned for lending of money

A

Interest income

43
Q

the consumption of assets or utilization of services of other business entities to generate revenues

A

Expenses

44
Q

wages of employees that are connected with the administrative phases of the business

A

Salaries expenses

45
Q

compensation granted to employees that are usually computed or based on the amount of their sales

A

Commission expenses

46
Q

allowance given for travel expenses

A

traveling expenses

47
Q

expenses used for postage and other means of communication

A

Postage and Communication expenses

48
Q

the amount of taxes incurred

A

Taxes expenses

49
Q

include the cost of electricity, water, and fuel consumed by the business

A

Utilities expenses

50
Q

premiums or insurance policies paid and incurred by the business

A

Insurance expenses

51
Q

expenses for repairing or servicing the buildings, and pieces of equipment and machinery of the business

A

Repair and Maintenance expenses

52
Q

the amount paid for the lease and occupation of property premises

A

Rent expenses

53
Q

the sum added to the principal of money obligations

A

Interest expenses

54
Q

include expenses in connection with the marketing and promoting the products

A

Advertising expenses

55
Q

with the passage of time, all plant assets with the exception of land lose their productivity and value

A

Depreciation expenses

56
Q

expenses incurred other than those given above

A

Miscellaneous expenses

57
Q

considered the economic resources

A

assets

58
Q

regarded as the “outsider claims”

A

liabilities

59
Q

regarded as the “insider claims”

A

owner’s equity

60
Q

business transactions always affect two accounts

A

Double-entry bookkeeping

61
Q

Basic accounting equation:

A) = (L) + (OE

A

Assets (A) = Liabilities (L) + Owner’s Equity (OE)

62
Q

an accounting device for grouping, summarizing, or classifying changes caused by transactions

A

Account

63
Q

commonly used prior to the formal entry of transactions in the basic books of accounting

A

T-Account

64
Q

it is called the diary of the business since it records all the transactions happening in its life in the order of their occurrence. It is called the “book of original entry”

A

Journal

65
Q

convenient tool for systematizing the financial activities and for preparing the income statement and balance sheet

A

Ledgers

66
Q

the process of transferring entries or information from the journal to the ledger

A

Posting

67
Q

also called the “book of final entry”. Transactions are finally transferred or recorded in the __________

A

General ledger

68
Q

Financial Statements:

A

Income statement
Balance sheet
Cash flow statement

69
Q

a financial report on business transactions over a defined period of time

A

Income statement

70
Q

this form represents the income and expenses in a series of operations of additions/subtractions before arriving at the final result of net income or net loss. This form is applicable for merchandising businesses

A

The Multiple-Step Form

71
Q

this form arranges all accounts of income in one group, all accounts of expenses in another group, and then deduct the total amount of expenses from the total amount of income in a single-step operation of subtraction to find the total net income or net loss. This form is applicable for service businesses

A

Single-step form

72
Q

reports the current financial position of the business. Considered as the business portfolio or the “Statement of Final Position”

A

Balance Sheet

73
Q

considered to be the most liquid asset and the lifeblood of the pharmacy

A

Cash

74
Q

mainly an internal statement used by the management to keep track of cash flow over time

A

Cash flow statement:
Cash receipts
Cash disbursement
Reconciliation of cash excess or deficiencies

75
Q

a financial statement that shows the changes that have occurred in the capital, drawings, and profit during the period. It aims to show the Ending Balance of the owner’s Capital account

A

Statement of Changes in Owner’s Equity (SCOE)

76
Q

refers to the stock of products held to met future demend/s. The least liquid current asset

A

Inventory

77
Q

the practice of planning, organizing, and controlling inventory so that it contributes to the profitability of the business

A

Inventory management

78
Q

much harder to quantify and monitor, but equally important

A

Inventory control

79
Q

aided by the “wantbook”

A

Intuitive method

80
Q

set of systematic wantbooks

A

Systematic wantbook method

81
Q

simplest and easiest inventory control systems

A

Open-to-buy Budget System

82
Q

formal control system

A

Stock record system

83
Q

deals with both how much to purchase and appropriate recorder point, or when to buy

A

Economic Order Quantity (EOQ)

84
Q

most efficient inventory control method, the system is programmed to provide a list and quantities of products to be ordered to maintain the inventory at a designated level

A

Perpetual Inventory method

Pharmacy Administration, Leadership, and Management (4 decks)

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