Accounting 1St Test

Front 1

Statement of Cash flows

Back 1

Shows the amount of cash provided or used by operating activities, investing activities and financing activities.

Front 2

comparability

Back 2

ability to compare the accounting information of different companies because they use the same accounting principles

Front 3

*conservatism

Back 3

*the approach of choosing an accounting method when alternatives exist, that will least likely overstates assets and net income

Front 4

consistency

Back 4

use of the same accounting principles and methods from year to year within a company

Front 5

cost principle

Back 5

an accounting principle that states that companies should record assets at their cost

Front 6

current assets

Back 6

cash and other resources that companies reasonably expect to convert to cash or use up within one year or the operating cycle, whichever is longer.

Front 7

current liabilities

Back 7

obligations that a company reasonably expects to pay within the next year or operating cycle, whichever is longer

Front 8

current ratio

Back 8

a measure used to evaluate a company's liquidity and short-term debt paying ability, computed as current assets/current liabilities

Front 9

debt to total assets ratio

Back 9

measures the percentage of total financing provided by creditors; computed as total debt/total assets

Front 10

earnings per share

Back 10

a measure of the net income earned on each share of common stock
(net income-prefered stock dividends/average common shares outstanding)

Front 11

economic entity assumption

Back 11

an assumption that every economic entity can be separately identified and accounted for

Front 12

free cash flow

Back 12

cash remaining from operating activities after adjusting for capital expenditures and dividends paid____ (cash provided by operations-capital expenditures-cash dividends)

Front 13

full disclosure principle

Back 13

Dictates that companies disclose circumstances and events that make a difference to financial statement users

Front 14

going concern assumption

Back 14

the assumption that the company will continue in operation for the foreseeable future

Front 15

intangible assets

Back 15

assets that do not have physical substance

Front 16

liquidity

Back 16

the ability of a company to pay obligations that are expected to become due within the next year or operating cycle

Front 17

materiality

Back 17

the constraint of the determining whether an item is large enough to likely influence the decision of an investor or creditor

Front 18

monetary unit assumption

Back 18

an assumption that requires that only those things that can be expressed in money are included in the accounting records

Front 19

relevance

Back 19

the quality of information that indicates the information makes a difference in a decision

Front 20

reliability

Back 20

the quality of information gives assurance that it is free of error, is factual and is neutral

Front 21

solvency

Back 21

the ability of a company to pay interest as it comes due and to repay the balance of debt at it's maturity

Front 22

working capital

Back 22

current assets - current liabilities

Front 23

assets (cash+accounts receivable+ supplies)

Back 23

=liabilities (accounts payable+bonds payable)+stockholders equity (common stock+retained earnings)

Front 24

Revenue recognition principle

Back 24

principle that companies recognize revenue in the accounting period which it is earned

Front 25

matching principle

Back 25

the principle that dictates that companies match efforts (expenses) with accomplishments (revenue)

Front 26

time period assumption

Back 26

assumption that economic life of a business can be divided into artificial time periods

Front 27

accrual basis accounting

Back 27

accounting basis in which companies record, in the periods in which events occur, transactions that change a company's financial statements, even if cash was not exchanged

Front 28

accrued revenue

Back 28

revenues earned but not yet recieved in cash or recorded

Front 29

accrued expenses

Back 29

expenses incurred but not yet paid in cash or recorded (interest, rent, salaries)