Financial Management Flashcards
Account
A statement summarizing the record of transactions in the form of credits, debits, accruals, and adjustments that have occurred and have an effect on an asset, equity, liability, or past, present, or future revenue.
Account balance
an account at the end of a reporting period. This applies for all types of accounts. A bank account balance shows the amount owed to you by the bank whereas a credit card balance shows the amount you owe to the credit card company.
Accounting period
A specific period of time in which the activities of a company are summarized, usually a year.
Accounts payable
Money owed by a company to those with which it does business. It is also an accounting entry that represents an entity’s obligation to pay cash to its creditors. The accounts payable entry is found on a balance sheet under the heading current liabilities. Accounts payable are often referred to as payables. Think of the phone company, the gas company, and the community food vendor as types of creditors. Each demands payment for goods or services rendered and must be paid accordingly. If a community doesn’t pay its bills, it is considered to be in default.
Accounts receivable
Money owed by customers (residents or others) to a community in exchange for goods or services that have been delivered or used but not yet paid for. Accounts receivable usually come in the form of operating lines of credit and are usually due within a relatively short time period, ranging from a few days or weeks to a year. Most accounts receivable in assisted living are for services billed in. If you look at the balance sheet of an assisted living community, you will usually see accounts receivable recorded as an asset because they represent a legal obligation for the customer to remit cash for its debts. Accounts receivable are not limited to businesses—individuals have them as well. People get receivables from their employers on a monthly or biweekly basis in the form of a paycheck. They are legally owed this money for services (work) provided.
Accured interest payable
A current liability account that shows amount of interest accrued on a company debt even though it has not been charged with interest.
Amortization
Process of paying off a liability, deferred charge, or capital expense over some period of time.
Auditing
The process of checking records and reports to make sure they are accurate.
Assets
Property used in operation of the company, that includes cash, buildings, good will, land, and so forth.
Balance sheet
Shows the financial position at any given point in time. This statement gives information about assets, liabilities, and equities of a community.
Breakeven point
Level of operation at which dollars received from sales just cover fixed overhead and the variable costs involved in operations.
Budget
Operating road map of future financial performance. Budgets outline company and individual goals and responsibility and a measure for evaluating performance.
Chart of accounts
An index showing the order and numbering of all the accounts in a ledger.
Control systems
A system designed to manage a specific operating system. A control system for managing departmental purchases might include a beginning monthly budget amount that gets translated to a monthly budget control sheet. Monthly purchase order amounts are then recorded on the sheet showing a remaining balance. As goods are received, purchases are matched to invoices to ensure that the correct goods and prices are received and that payment is made.
Cost accounting
Deals with the measurement and allocation of costs to be assigned to a service or a phase of a service or production.
