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25 Cards in this Set
- Front
- Back
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Term: Account
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Def: A standardized format that organizations use to accumulate the dollar effect of transactions on each financial statement item. (48)
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Term: Accounting Cycle
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Def: The process used by entities to analyze and record transactions, adjust the records at the end of the period, prepare financial statements, and prepare the records for the next cycle. (54)
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Term: Additional Paid-In Capital (Paid-In Capital, Contributed Capital in Excess of Par)
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Def: The amount of contributed capital less the par value of the stock. (51)
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Term: Assets
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Def: Probable future economic benefits owned by the entity as a result of past transactions. (45)
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Term: Common Stock
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Def: The basic voting stock issued by a corporation. (51, 549)
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Term: Continuity (Going-Concern) Assumption
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Def: States that businesses are assumed to continue to operate into the foreseeable future. (44)
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Term: Credit
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Def: The right side of an account. (55)
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Term: Current Assets
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Def: Assets that will be used or turned into cash within one year. Inventory is always considered a current asset regardless of the time needed to produce and sell it. (45)
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Term: Current Liabilities
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Def: Short-term obligations that will be paid in cash (or other current assets) within the current operating cycle or one year, whichever is longer. (45, 453)
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Term: Debit
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Def: The left side of an account. (55)
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Term: Faithful Representation
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Def: Requires that the information be complete, neutral, and free from error. (44)
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Term: Journal Entry
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Def: An accounting method for expressing the effects of a transaction on accounts in a debits-equal-credits format. (57)
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Term: Liabilities
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Def: Probable debts or obligations of the entity that result from past transactions, which will be paid with assets or services. (45, 453)
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Term: Mixed-Attribute Measurement Model
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Def: Applied to measuring different assets and liabilities of the balance sheet. (44)
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Term: Par Value
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Def: (1) The nominal value per share of capital stock established by the board of directors; serves as the basis for legal capital; it establishes the minimum amount a stockholder must contribute and has no relationship to the market price of the stock. (2) Also, another name for bond principal, or the maturity amount of a bond. (51, 501, 550)
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Term: Primary Objective of Financial Reporting to External Users
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Def: To provide useful economic information about a business to help external parties make sound financial decisions. (43)
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Term: Relevant Information
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Def: Information that can influence a decision; it is timely and has predictive and/or feedback value. (44)
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Term: Retained Earnings
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Def: Cumulative earnings of a company that are not distributed to the owners and are reinvested in the business. (46)
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Term: Separate-Entity Assumption
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Def: States that business transactions are separate from the transactions of the owners. (44)
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Term: Stable Monetary Unit Assumption
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Def: States that accounting information should be measured and reported in the national monetary unit without any adjustment for changes in purchasing power. (44)
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Term: Stockholders' Equity (Shareholders' or Owners' Equity)
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Def: The financing provided by the owners and the operations of the business. (45)
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Term: T-account
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Def: A tool for summarizing transaction effects for each account, determining balances, and drawing inferences about a company's activities. (58)
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Term: Transaction
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Def: (1) An exchange between a business and one or more external parties to a business or (2) a measurable internal event such as the use of assets in operations. (47)
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Term: Transaction Analysis
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Def: The process of studying a transaction to determine its economic effect on the business in terms of the accounting equation. (49)
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Term: Trial Balance
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Def: A list of all accounts with their balances to provide a check on the equality of the debits and credits. (64)
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