Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Accounting > Glossary > Flashcards

Glossary Flashcards

1
Q

Account

A

the record of the changes that have occurred in a particular asset, liability, or shareholders equity during a period. The basic summary device of accounting.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Accrual

A

An expense or a revenue that occurs before the business pays or receives cash. An accrual is the opposite of a deferral.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Accrual accounting

A

Accounting that records the impact of a business event as it occurs, regardless of whether the transaction affected cash.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Accrued expense

A

An expense incurred but not yet paid in cash.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Accrued liability

A

a liability for an expense that has not yet been paid by the company.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Accrued revenue

A

A revenue that has been earned but not yet received in cash.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Accumulated Depreciation

A

The account showing the cumulative sum of all depreciation expense from the date of acquiring a plant asset.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Adjusted trial balance

A

A list of all the ledger accounts with their adjusted balances.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Carrying amount (of a plant asset)

A

The assets cost minus accumulated depreciation.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Cash-basis accounting

A

Accounting that records only transactions in which money is received or paid.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Chart of Accounts

A

list of a company accounts and their account numbers.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Classified balance sheet

A

A balance sheet that shows current assets separate from longterm assets, and current liabilities separate from long-term liabilities.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Closing entries

A

Entries the transfer the revenue, expense and dividend balances fromthese respective accounts to the Retained Earnings account.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Closing the books

A

The process of preparing the accounts to begin recording the next periods transactions. Closing the accounts consists of journalizing and posting the closing entries to set the balances of the revenue, expense, and dividend accounts to zero. Also called closing the accounts.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Contra account

A

An account that always has a companion account and whose normal balance is opposite that of the companion account.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Credit

A

The right side of an account.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Current ratio

A

Current assets divided by current liabilities. Measures a companys ability to pay current liabilities with current assets.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Debit

A

the left side of an account.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Debt ratio

A

ratio of total liabilities to total assets. States the proportion of a companys assets that is financed with debt

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Deferral

A

An adjustment for which the business paid or received cash in advance. Examples include prepaid rent, prepaid insurance and supplies.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Depreciation

A

allocation of the cost of a plant asset over its useful life.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Double-entry system

A

An accounting system that uses debits and credits to record the dual effects of each business transaction.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Journal

A

The chronological accounting record of an entitys transactions.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

Ledger

A

The book of accounts and their balances.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

Liquidity

A

Measure of how quickly an item can be converted to cash.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

Long-term asset

A

An asset that is not current.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

Long-term liability

A

A liability that is not a current liability.Net income as a of sales revenue - This ratio determines how much of the company_Ͷssales revenue ends up as net income.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

Multi-step income statement

A

An income statement that contains subtotals to highlightimportant relationships between revenues and expenses.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

Net income as a of sales revenue

A

This ratio determines how much of the companys sales revenue ends up as net income.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

Operating cycle

A

Time span during which cash is paid for goods and serve goods and services, and these goods and services are sold to bring in cash.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

Permanent accounts

A

Assets, liabilities and shareholders equity.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

Posting

A

Copying amounts from the journal to the ledger.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
33
Q

Prepaid expenses

A

A category of miscellaneous assets that typically expire or get used up in the near future. Examples include Prepaid Rent, Prepaid Insurance and Supplies.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
34
Q

Return on sales

A

Net income divided by sales. Measures how much sales revenue ends up as net income.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
35
Q

Revenue principle

A

Governs when to record revenue and the amount to record.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
36
Q

Single-step income statement

A

Lists all revenues together and all expenses together; there is only one step in arriving at net income.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
37
Q

Temporary accounts

A

Revenues and expenses related to a limited period.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
38
Q

Time-period concept

A

Ensures that accounting information is reported at regularintervals.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
39
Q

Transaction

A

Any event that has a financial impact on the business and can be measured.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
40
Q

Unearned revenue

A

an obligation arising from receiving cash before providing a service.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
41
Q

Cost of goods sold

A

cost of the inventory the business has sold to customers. Also called cost of sales.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
42
Q

Net realizable value

A

the amount a business could get if it sold the inventory less the cost of selling it

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
43
Q

Purchase return

A

a decrease in the cost of purchases because the buyer returned the
goods to the seller.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
44
Q

Purchase discount

A

a decrease in the cost of purchases earned by making an early
payment to the vendor.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
45
Q

Purchase allowance

A

a decrease in the cost of purchases because the seller has granted the buyer a subtraction (an allowance) from the amount owed.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
46
Q

Inventory turnover

A

ratio of cost of goods sold to average inventory. Indicates how rapidly inventory is sold.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
47
Q

Gross profit percentage

A

gross profit divided by net sales revenue. Also called the

gross margin percentage.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
48
Q

Cost of goods sold model

A

formula that brings together all the inventory data for the
entire accounting period:
Beginning inventory + purchases = goods available for sale.
Then, goods available for sale – ending inventory = cost of goods sold.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
49
Q

Gross margin

A

sales revenue minus cost of goods sold. Also called the gross profit.

50
Q

Gross profit

A

sales revenue minus cost of goods sold. Also called the gross margin.

51
Q

Gross profit method

A

a way to estimate inventory based on a rearrangement of the cost of goods sold model:
Beginning inventory + net purchases = goods available for sale – cost of goods sold = ending inventory.
Also called the gross margin method.

52
Q

Comparability

A

investors like to compare a company’s financial statements from one year to the next. Therefore, a company must consistently use the same accounting method each year.

53
Q

Lower-of-cost-and-net-realizable-value (LCNRV) rule

A

Requires that an asset be reported in the financial statement at whichever is lower – its historical cost or its net realizable value.

54
Q

Disclosure principle

A

A business’ financial statements must report enough information for outsiders to make knowledgeable decisions about the business. The company should report relevant, reliable, and comparable information about its economic affairs.

55
Q

Consistency

A

a business must use the same accounting methods and procedures from period to period.

56
Q

Periodic inventory system

A

An inventory system in which the business does not keep a continuous record of the inventory on hand. Instead, at the end of the period, the business makes a physical count of the inventory on hand and applies the appropriate unit costs to determine the cost of the ending inventory.

57
Q

Perpetual inventory system

A

An inventory system in which the business keeps a continuous record for each inventory item to show the inventory on hand at all times.

58
Q

Specific-unit-cost method

A

Inventory costing based on the specific cost of particular

units of inventory. Also called the specific identification method.

59
Q

Weighted-average-cost method

A

Inventory costing based on the average cost of inventory for the period. Weighted-average-cost is determined by dividing the cost of goods available by the number of units available. Also called the average cost method.

60
Q

First-in, first-out (FIFO) cost (method)

A

Inventory costing method by which the first costs into inventory are first costs out to cost of goods sold. Ending inventory is based on the costs of the most recent purchases.

61
Q

Accounting

A

The information system that measures business activities, processes that information into reports and financial statements, and communicates the results to decision-makers.

62
Q

Ethics

A

standards of right and wrong that transcend economic and legal boundaries. Ethical standards deal with the way we treat others and restrain our own actions because the desires, expectations, or rights of others and obligations to them.

63
Q

Financial statements

A

business documents that report financial information about a business entity to decision makers.

64
Q

Accounting Equation

A

the most basic tool of accounting:

Assets = Liabilities + Owners’ Equity.

65
Q

Entity assumption

A

An organization or a section of an organization that, for accounting purposes, stands apart from other organizations and individuals as a separate economic unit.

66
Q

Stable-monetary-unit assumption

A

The reason for ignoring the effect of inflation in the accounting records, based on the assumption that the dollar purchasing power is relatively stable.

67
Q

Cost assumption

A

Assumption that assets and services should be recorded at their actual cost when acquired.

68
Q

Going concern assumption

A

Holds that the entity will remain in operation for the foreseeable future.

69
Q

Faithful representation

A

The fundamental qualitative characteristic that accounting information is complete, free from bias, and without material error.

70
Q

International Financial Reporting Standards (IFRS)

A

international accounting standards issued by the International Accounting Standards Board (IASB). Canada is converging Canadian GAAP with IFRS for Publicly Accountable Enterprises (PAEs) effective January 2011.

71
Q

Generally accepted accounting principle (GAAP)

A

accounting standards, issued by the Canadian Institute of Chartered Accountants (CICA) Accounting Standards Board, that govern how accounting is practiced in Canada.

72
Q

Relevance

A

the fundamental qualitative characteristic of accounting information that is capable of making a difference to the decision maker and has predictive or confirming value.

73
Q

Proprietorship

A

a business with a single owner.

74
Q

Publicly accountable enterprises (PAEs)

A

corporations that have issued or plan to issue shares or debt in a public market.

75
Q

Private Enterprises (PEs)

A

corporations whose shares are privately held either by its founders and/or by family members.

76
Q

Board of Directors

A

Group elected by the shareholders to set policy for a corporation and to appoint its officers.

77
Q

Shareholder

A

a person who owns shares of stocks in a corporation.

78
Q

Corporation

A

a business owned by shareholders. A corporation is a legal entity, an “artificial person” in the eyes of the law.

79
Q

Limited liability partnership

A

a business organization in which the business partnership (not the partners) is liable for the partnership’s debts.

80
Q

Partnership

A

an association of two or more persons who co-own a business.

81
Q

Financial accounting

A

the branch of accounting that provides information to people outside the firm.

82
Q

Management accounting

A

the branch of accounting that generates information for the

internal decision-makers of a business such as top executives.

83
Q

Balance Sheet

A

List of an entity’s assets, liabilities, and owners’ equity as of a specific date. Also called the Statement of Financial Position Statement of financial position – another name for the Balance Sheet.

84
Q

Asset

A

an economic resource that is expected to produce a benefit in the future.

85
Q

Property, plant, and equipment

A

long-lived assets, such as land, buildings, and equipment, used in the operation of the business. Also called plant assets, fixed assets, or tangible capital assets.

86
Q

Plant assets

A

an asset, another name for property, plant, and equipment.

87
Q

Capital assets

A

an asset, another name for property, plant, and equipment.

88
Q

Fixed assets

A

an asset, another name for property, plant and equipment.

89
Q

Inventory

A

an asset, merchandise that a company sells; also includes raw materials for use in a manufacturing process.

90
Q

Accounts Receivable

A

an asset, amounts due from customers to whom a business has sold goods and or services.

91
Q

Cash and cash equivalents

A

an asset, money and any medium of exchange that a bank accepts at face value.

92
Q

Current assets

A

an asset that is expected to be converted to cash, sold or consumed during the next 12 months, or within the business normal operating cycle if longer than a year.

93
Q

Liability

A

an economic obligation (a debt) payable to an individual or an organization outside of the entity.

94
Q

Long-term debt

A

a liability that falls due beyond one year from the date of the financial
statements.

95
Q

Long-term liabilities

A

liabilities that are due beyond one year after the balance sheet date.

96
Q

Accounts Payable

A

a liability for goods or services purchased on credit and backed by the general reputation and credit standing of the debtor.

97
Q

Current liability

A

a debt due to be paid within one year or within the entity’s operating cycle, if the cycle is longer than a year.

98
Q

Shareholders’ equity

A

the shareholders’ ownership interest in the assets of a

corporation. Also called owners’ equity.

99
Q

Owners’ equity

A

the claim of the owners of a business to the assets of the business. Also called capital, shareholders’ equity, or net assets.

100
Q

Net assets

A

another name for owners’ equity.

101
Q

Common shares

A

the most basic form of share capital. Common shareholders own a corporation.

102
Q

Capital

A

another name for the owner’s equity of a business.

103
Q

Contributed capital

A

the amount of shareholders’ equity that shareholders have

invested in the corporation.

104
Q

Stock

A

shares into which the owners’ equity of a corporation is divided.

105
Q

Income statement

A

a financial statement listing an entity’s revenues, expenses, and net income or net loss for a specified period. Also called the Statement of Operations or the Statement of Earnings.

106
Q

Statement of earnings

A

another name for the Income Statement.

107
Q

Revenues

A

increase in retained earnings from delivering public goods or services to
customers or clients

108
Q

Expenses

A

decrease in retained earnings that results from operations; the cost of doing
business; opposite of revenues.

109
Q

Profit

A

the excess of revenues over expenses.

110
Q

Net earnings

A

another name for net income.

111
Q

Net income

A

excess of total revenues over total expenses. Also called net earnings or net profits.

112
Q

Statement of operations

A

another name for the Income Statement

113
Q

Statement of retained earnings

A

summary of the changes in the retained earnings of a corporation during a specific period

114
Q

Retained earnings

A

the amount of shareholders’ equity that the corporation of the
business has earned through profitable operation and has not given back to shareholders

115
Q

Deficit

A

negative balance in retained earnings caused by net losses over a period of years.

116
Q

Dividends

A

distributions (usually cash) by a corporation to its shareholders.

117
Q

Statement of cash flows

A

Reports cash receipts and cash payments classified according to the entity’s major activities: operating, investing, and financing.

118
Q

Operating activities

A

activities that create revenue or expense in the entity’s major line of business; a section of the Statement of Cash Flows. Operating activities affect the income statement

119
Q

Investing activities

A

activities that increase or decrease the capital assets available to the business; a section of the Statement of Cash Flows.

120
Q

Financing activities

A

activities that obtain from investors and creditors that cash needed to launch and sustain the business; a section of the statement of cash flows.

Accounting (9 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions