Financial Accounting

Question 1

Amount

Answer 1

The numerical value of info princes of stuff you are provided in the information part. A record of increases and decreases in each of the basic elements of the financial statements (each of the company’s asset, liability, shareholders’ equity, revenue, expense, gain and loss items).

Question 2

Account Payable

Answer 2

When you buy something you must pay back. An obligation that arises when a business purchases goods or services on credit.

Question 3

Accounts Recievable

Answer 3

When someone buys from you, they owe you. Money due from another business or individual as payment for services performed or goods delivered.

Question 4

Accounting

Answer 4

The process of identifying, measuring, recording and communicating financial information about a company’s activities so that decision makers can make informed decisions.

Question 5

Accounting Cycle

Answer 5

The procedures a company uses to transform the results of its business activities into financial statements.

Question 6

Accounting System

Answer 6

The methods and records used to identify, measure, record, and communicate financial information about a business.

Question 7

Accounts receivable turnover ratio

Answer 7

Net credit sales or net sales divided by average accounts receivable.

Question 8

Accrual-basis accounting

Answer 8

A method of accounting in which revenues are generally recorded when earned (rather than when cash is received) and expenses are matched to the periods in which they help produce revenues (rather than when cash is paid).

Question 9

Accrued expenses

Answer 9

Previously ends order expenses that have been incurred, but not yet paid in cash.

Question 10

Accrued liabilities

Answer 10

Liabilities that usually represent the completed portion of activities that are in the process at the end of the period.

Question 11

Accrued revenues

Answer 11

Previously unrecorded revenues that have been earned but for which no cash has yet been received.

Question 12

Accumulated depriciation

Answer 12

The total amount of depreciation expense that has been recorded for an asset since the asset was acquired. It is reported on the statement of financial position of partially completed transactions.

Question 13

Adjusted trial balance

Answer 13

An updated trial balance that reflects the changes to account balances as the result of adjusting entries.

Question 14

Adjusting entries

Answer 14

Journal entries that are made at the end of an accounting period to record the completed portion of partially completed transactions.

Question 15

Aging method

Answer 15

A method in which had bad debt expense is estimated indirectly by determining the ending balance desired in the allowance for doubtful accounts and then computing the necessary adjusting entry to achieve this balance; the amount of this adjusting entry is also the amount of bad debt expense.

Question 16

Allowance for doubtful accounts

Answer 16

A contra-asset account that is established to “store” the estimate of uncollectible accounts until specific accounts are identified as uncollectible.

Question 17

Amortization

Answer 17

The process whereby companies systematically allocate the cost of their intangible operating assets as an expense among the accounting periods in which the asset is used is used and the benefits are received.

Question 18

Amortized cost method

Answer 18

A method that amortizes bond investment premium or discount from the purchase safe of the investment to the date of bond maturity.

Question 19

Annuity

Answer 19

A series of equal cash flows at regular intervals.

Question 20

Asset acquisition

Answer 20

The purchase by a company of one or more assets from a selling company.

Question 21

Asset efficiency ratios (operating ratios)

Answer 21

Ratios that measure how efficiently a company uses its assets.

Question 22

Asset turnover ratio

Answer 22

A ratio that measures the efficiency with which a corporations assets (usually accounts receivable or inventory) are used to produce sales revenues.

Question 23

Assets

Answer 23

Economic resources representing expected future economic benefits controlled by the business (e.g. Cash, accounts receivable, inventory, land, buildings, equipment and intangible assets).

Question 24

Audit report

Answer 24

The auditor’s opinion as to whether the company’s financial statements are fairly stated in accordance with generally accepted accounting principles (GAAP).

Question 25

Authorizations of transactions

Answer 25

Transactions should be performed by or under the direction of a person who has the appropriate level of authority.

Question 26

Authorization of transactions

Answer 26

Transactions should be performed by or under the direction of a person who has the appropriate level of authority.

Question 27

Authorized shares

Answer 27

The maximum number of shares a company may issue in each share class.

Question 28

Average cost method

Answer 28

An inventory costing method that allocates the cost of goods available for sale between ending inventory and cost of goods sold based on a weighted average cost per unit.

Question 29

Average says to sell inventory

Answer 29

An estimate of the number of days it takes a company to sell its inventory. It is found by dividing 365 days by the inventory turnover ratio.

Question 30

Bad debt expense

Answer 30

The expense that results from receivables that are not paid.

Question 31

Balance sheet

Answer 31

A financial statement which discloses the assets, liabilities and equity is an entity at a point in time.

Question 32

Bank reconciliation

Answer 32

The process of reconciling any differences between a company’s accounting records and the bank’s accounting records.

Question 33

Bond

Answer 33

A type of note that requires the issuing entity to pay the face value of the bond to the holder when it matures and, usually, periodic interest at s specified rate.

Question 34

Book value (carrying value)

Answer 34

The value of an asset or liability as it appears in the statement of financial position. Book value is calculated as the cost of the asset or liability minus the balance in its related contra-account (e.g. Cost of equipment less accumulated depreciation; notes payable less discount on notes payable).

Question 35

Business combination

Answer 35

A transaction or series of transactions that brings together two or more previously delegate entities to form a single accounting entity.

Question 36

Business process risks

Answer 36

Threats to the internal processes of a company.

Question 37

Callable bonds

Answer 37

Bonds that give the borrower the right to pay off (or call) the bonds prior to their due date. The borrower typically “calls” debt when the interest rate being paid is much higher than the current market conditions.

Question 38

Capital

Answer 38

A company’s assets less it’s liabilities. Capital is also known as shareholders’ equity.

Question 39

Capital asset turnover rate

Answer 39

A ratio that indicates how efficiently a company uses its fixed assets. This ratio is calculated by dividing net sales by average fixed sales

Question 40

Capital expenditures

Answer 40

Expenditures to acquire long-term assets or extend the life, expand the productive capacity, increase efficiency, or improve the quality of existing long-term assets.

Question 41

Cash basis accounting

Answer 41

A method of accounting in which revenue is recorded when cash is received