Unit 6: Chapters 18, 19, & 20 Flashcards

1
Q

adjustment

A

an amount that is added to or subtracted from an account balance to bring that balance up to date

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2
Q

beginning inventory

A

the merchandise a business has on hand at the beginning of the period

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3
Q

ending inventory

A

the merchandise a business has on hand at the end of a period

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4
Q

physical inventory

A

an actual count of all merchandise on hand and available for sale

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5
Q

prepaid expense

A

an expense paid in advance

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6
Q

adjusting entries

A

journal entries that update the general ledger accounts at the end of a period

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7
Q

capital stock

A

stockholder’s equity account

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8
Q

stockholder’s equity

A

value of the stockholder’s claims to the corporation

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9
Q

retained earnings

A

represents the increase in the stockholder’s equity from the portion of net income not distributed to the stockholders

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10
Q

comparability

A

allows accounting information to be compared from one fiscal period to another

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11
Q

reliability

A

refers to the confidence users have that the financial information is reasonably free from bias and error

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12
Q

relevance

A

requirement that all information that would affect decisions of financial statement users be disclosed in the financial reports

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13
Q

full disclosure

A

financial reports include enough information to be complete

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14
Q

materiality

A

relevant information should be included in financial reports

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15
Q

net sales

A

amount of sales for the period less any sales discounts, returns, and allowances

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16
Q

net purchases

A

represents all costs related to merchandise purchased during the period

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17
Q

gross profit on sales

A

the profit made before operating expenses are deducted

18
Q

operating expenses

A

cost of goods and services used in the process of earning revenue for a business

19
Q

selling expense

A

incurred to sell or market the merchandise sold

20
Q

administrative expense

A

related to the management of a business

21
Q

operating income

A

the excess of gross profit over operating expenses

22
Q

vertical analysis

A

each $ amount reported on a financial statement is also reported as a % of another amount called a base amount (appears on same statement)

23
Q

statement of retained earnings

A

reports the changes in the retained earnings account during the period

24
Q

horizontal analysis

A

the comparison of the same items on a financial statement for two or more accounting periods or dates, and the determination of changes from one period of date to the next

25
Q

base period

A

a period (usually a year), that is used for comparison

26
Q

cash inflows

A

receipts of cash

27
Q

cash outflows

A

payments of cash

28
Q

operating activities

A

include all transactions that occurred during the accounting period as part of normal business operations

29
Q

investing activities

A

includes loans the business makes, payments received for those loans, purchase & sale of plant assets (property that will be used in a business for more than one year) and investments

30
Q

financing activities

A

borrowing activities needed to finance the company operations and the repayment of these debts

31
Q

Closely Held Corporation

A

a corporation owned by a few persons or by family

32
Q

Proxy

A

if a board member can not attend the meeting in which voting will take place, they can send someone else know as…

33
Q

Paid-in Capital in Excess of Par

A

when stock is sold at a price that is above par, the excess amount over par is then credited to a separate stockholder’s equity account called:

34
Q

Publicly Held Corporation

A

one whose stock is widely own, has a large market, and usually traded on a stock exchange

35
Q

Preferred Stock

A

-receive dividend s before common stock holder’s
-given preference in distribution of assets (if a corporation goes out of business)

36
Q

Par value

A

the amount assigned to each share of stock that a corporation sells
-must be printed on the stock certificate

37
Q

Board of Directors

A

the group of people who manage the corporation and are responsible to govern affairs of the corporation.

38
Q

Dividend

A

a distribution of cash to stockholder’s

39
Q

Authorized Capital Stock

A

the maximum number of shares a corporation may issue

40
Q

Common Stock

A

-elect board of directors
-share earnings by receiving dividends
-entitled to share of assets if corporation goes out of business

41
Q

Statement of Stockholder’s Equity

A

reports all the changes in ALL stockholder’s equity accounts during the period (not just retained earnings)