Week 1 Terms Flashcards
Event
Occurence which can be measured and change a businesses’ financial position
Transaction
An event which has a monetary impact on a businesses’ financial state.
Real Account (permanent)
Account which retains its balance and rolls forward
Nominal account
Reports revenue, expenses, gains and losses. Added to real account at end of period.
Journal
Detailed account which records all financial transactions.
Posting
Transfer of debit and credit amount from journals to ledgers.
Ledger
Collection of an entire group of similar accounts
Trial balance
Checks and balances of gains and losses (GL) before making closing entries.
Adjusting entries
Entries posted to systematically assign expenses and revenue by category.
Closing entries
Final entries made to nominal (temp) account to achieve zero balance.
Posting trial balance
Prepared after closing entries have been made to respective ledgers testing to see if debits equal credits on real accounts.
Asset
What you own which can be liquidated.
Liabilities
Monies owed.
Distribution to Owner
Transferring assets to owners
Revenues
Money coming in from core operations
Expenses
Regular payments; ie Payroll.
Gains
Other revenues with recurring or incidental income.
Losses
Something sold for less than its value; post-event loss of revenue (natural disaster, etc.)
Comparability
Placing or relating value to similar assets or liabilities.
Consistency
Same methods of accounting management.
Predictive value
Information used to ascertain what a future worth will be.
Neutrality
Information within the financial statement is free from bias.
Representational faithfullness
Financial statements must be produced to accurately reflect business conditions.
Benefit exceeds Cost
Cost-Benefit analysis- the idea the benefit of acquisition of (X) is greater than the cost to obtain it.
Timeliness
Financial accounting information is provided in a manner which allows investors to act on it.
Verifiability
Financial accounting information which can be accurately confirmed.
Materiality
Items on a financial statement large enough to be considered influential to economic decision making.
Reliability
Trustworthiness of financial statements.
Relevance
Useful, understandable, timely financial statement information.
