Accounting Flashcards - Bad 1

Front 1

Account  

Back 1

A standardized format that organizations use to accumulate the dollar effects of transactions on each financial statement item. (4, 56)

Front 2

Accounting Cycle  

Back 2

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. (163)

Front 3

Accounting Entity  

Back 3

The organization for which financial data are to be collected. (7)

Front 4

Accounting Period  

Back 4

The time period covered by the financial statements. (10)

Front 5

Accounting  

Back 5

A system that collects and processes (analyzes, measures, and records) financial information about an organization and reports that information to decision makers. (4)

Front 6

Accounts Receivable (Trade Receivables, Receivables)  

Back 6

Open accounts owed to the business by trade customers. (290)

Front 7

Accrual Basis Accounting  

Back 7

Records revenues when earned and expenses when incurred, regardless of the timing of cash receipts or payments. (108)

Front 8

Accrued Expenses  

Back 8

Previously unrecorded expenses that need to be adjusted at the end of the accounting period to reflect the amount incurred and its related payable account. (166)

Front 9

Accrued Liabilities  

Back 9

Expenses that have been incurred but have not been paid at the end of the accounting period. (462)

Front 10

Accrued Revenues  

Back 10

Previously unrecorded revenues that need to be adjusted at the end of the accounting period to reflect the amount earned and its related receivable account. (166)

Front 11

Accumulated Other Comprehensive Income  

Back 11

Net unrealized gains or losses on securities, net minimum pension liability adjustments, and net foreign currency translation adjustment, which are directly credited or debited to the stockholders' equity account. (238)

Front 12

Acquisition Cost  

Back 12

Net cash equivalent amount paid or to be paid for the asset. (399)

Front 13

Adjusting Entries  

Back 13

Entries necessary at the end of the accounting period to measure all revenues and expenses of that period. (165)

Front 14

Aging of Accounts Receivable Method  

Back 14

Estimates uncollectible accounts based on the age of each account receivable. (295)

Front 15

Allowance for Doubtful Accounts (Allowance for Bad Debts, Allowance for Uncollectible Accounts)  

Back 15

Contraasset account containing the estimated uncollectible accounts receivable. (292)

Front 16

Allowance Method  

Back 16

Bases bad debt expense on an estimate of uncollectible accounts. (291)

Front 17

Amortization  

Back 17

Systematic and rational allocation of the acquisition cost of an intangible asset over its useful life. (419)

Front 18

Annuity  

Back 18

A series of periodic cash receipts or payments that are equal in amount each interest period. (475)

Front 19

Assets  

Back 19

Probable future economic benefits owned by the entity as a result of past transactions. (51)

Front 20

Assurance Services  

Back 20

are independent professional services that improve the quality of information for decision makers. (23)

Front 21

Audit  

Back 21

An examination of the financial reports to ensure that they represent what they claim and conform with generally accepted accounting principles. (23)

Front 22

Authorized Number of Shares  

Back 22

Maximum number of shares of corporation's capital stock that can be issued as specified in the charter. (553)

Front 23

Average Cost Method  

Back 23

uses the weighted average unit cost of the goods available for sale for both cost of goods sold and ending inventory. (347)

Front 24

Bad Debt Expense (Doubtful Accounts Expense, Uncollectible Accounts Expense, Provision for Uncollectible Accounts)  

Back 24

Expense associated with estimated uncollectible accounts receivable. (292)

Front 25

Balance Sheet (Statement of Financial Position)  

Back 25

Reports the amount of assets, liabilities, and stockholders' equity of an accounting entity at a point in time. (7)

Front 26

Bank Reconciliation  

Back 26

Process of verifying the accuracy of both the bank statement and the cash accounts of a business. (302)

Front 27

Bank Statement  

Back 27

Monthly report from a bank that shows deposits recorded, checks cleared, other debits and credits, and a running bank balance. (301)

Front 28

Basic Accounting Equation (Balance Sheet Equation)  

Back 28

Assets = Liabilities + Stockholders' Equity. (8)

Front 29

Bond Certificate  

Back 29

The bond document that each bondholder receives. (513)

Front 30

Bond Discount  

Back 30

The difference between selling price and par when a bond is sold for less than par. (515)

Front 31

Bond Premium  

Back 31

The difference between selling price and par when a bond is sold for more than par. (515)

Front 32

Bond Principal  

Back 32

The amount (1) payable at the maturity of the bond and (2) on which the periodic cash interest payments are computed. (512)

Front 33

Callable Bonds  

Back 33

Bonds that may be called for early retirement at the option of the issuer. (512)

Front 34

Capital Expenditures  

Back 34

Expenditures that increase the productive life, operating efficiency, or capacity of the asset and are recorded as increases in asset accounts, not as expenses. (403)

Front 35

Capital Lease  

Back 35

meets at least one of the four criteria established by GAAP and results in the recording of an asset and liability. (472)

Front 36

Capitalized Interest  

Back 36

Interest expenditures included in the cost of a self-constructed asset. (401)

Front 37

Cash Basis Accounting  

Back 37

Records revenues when cash is received and expenses when cash is paid. (108)

Front 38

Cash Equivalents  

Back 38

Short-term investments with original maturities of three months or less that are readily convertible to cash and whose value is unlikely to change. (299, 647)

Front 39

Cash Flows from Financing Activities  

Back 39

Cash inflows and outflows related to external sources of financing (owners and creditors) for the enterprise. (649)

Front 40

Cash Flows from Investing Activities  

Back 40

Cash inflows and outflows related to the acquisition or sale of productive facilities and investments in the securities of other companies. (649)

Front 41

Cash Flows from Operating Activities (Cash Flows from Operations)  

Back 41

Cash inflows and outflows directly related to earnings from normal operations. (647)

Front 42

Cash  

Back 42

Money or any instrument that banks will accept for deposit and immediate credit to the company's account, such as a check, money order, or bank draft. (299)

Front 43

Closing Entries  

Back 43

Made at the end of the accounting period to transfer balances in temporary accounts to Retained Earnings and to establish a zero balance in each of the temporary accounts. (179)

Front 44

Common Stock  

Back 44

The basic voting stock issued by a corporation. (555)

Front 45

Comparable Information  

Back 45

Information that can be compared across businesses because similar accounting methods have been applied. (231)

Front 46

Component Percentage  

Back 46

Expresses each item on a particular financial statement as a percentage of a single base amount. (708)

Front 47

Conservatism  

Back 47

Suggests that care should be taken not to overstate assets and revenues or understate liabilities and expenses. (247)

Front 48

Consistent Information  

Back 48

Information that can be compared over time because similar accounting methods have been applied. (231)

Front 49

Consolidated Financial Statements  

Back 49

The financial statements of two or more companies that have been combined into a single set of financial statements as if the companies were one. (614)

Front 50

Contingent Liability  

Back 50

Potential liability that has arisen as the result of a past event; not an effective liability until some future event occurs. (467)

Front 51

Continuity (Going-Concern) Assumption  

Back 51

States that businesses are assumed to continue to operate into the foreseeable future. (50)

Front 52

Contra-Account  

Back 52

An account that is an offset to, or reduction of, the primary account. (164)

Front 53

Contributed Capital  

Back 53

Results from owners providing cash (and sometimes other assets) to business. (53)

Front 54

Convertible Bonds  

Back 54

Bonds that may be converted to other securities of the issuer (usually common stock). (512)

Front 55

Copyright  

Back 55

Exclusive right to publish, use, and sell a literary, musical, or artistic work. (421)

Front 56

Cost of Goods Sold Equation  

Back 56

BI + P - EI = CGS. (343)

Front 57

Cost Principle  

Back 57

See historical cost principle.

Front 58

Cost-Benefit Constraint  

Back 58

Suggests that the benefits of accounting for and reporting information should outweigh the costs. (231)

Front 59

Coupon Rate  

Back 59

The stated rate of interest on bonds. (514)

Front 60

Credit Card Discount  

Back 60

Fee charged by the credit card company for its services. (286)

Front 61

Credit  

Back 61

The right side of an account. (63)

Front 62

Cumulative Dividend Preference  

Back 62

Preferred stock feature that requires specified current dividends not paid in full to accumulate for every year in which they are not paid. These cumulative preferred dividends must be paid before any common dividends can be paid. (565)

Front 63

Cumulative Effects of Changes in Accounting Methods  

Back 63

Amounts reflected on the income statement for adjustments made to balance sheet accounts when applying different accounting principles. (255)

Front 64

Current Assets  

Back 64

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. (51)

Front 65

Current Dividend Preference  

Back 65

The feature of preferred stock that grants priority on preferred dividends over common dividends. (565)

Front 66

Current Liabilities  

Back 66

Short-term obligations that will be paid in cash (or other current assets) within the current operating cycle or one year, whichever is longer. (51, 459)

Front 67

Debenture  

Back 67

An unsecured bond; no assets are specifically pledged to guarantee repayment. (512)

Front 68

Debit  

Back 68

The left side of an account. (63)

Front 69

Declaration Date  

Back 69

The date on which the board of directors officially approves a dividend. (560)

Front 70

Declining-Balance Depreciation  

Back 70

The method that allocates the cost of an asset over its useful life based on a multiple of (often two times) the straight-line rate. (409)

Front 71

Deferred Expenses  

Back 71

Previously acquired assets that need to be adjusted at the end of the accounting period to reflect the amount of expense incurred in using the asset to generate revenue. (165)

Front 72

Deferred Revenues  

Back 72

Previously recorded liabilities that need to be adjusted at the end of the period to reflect the amount of revenue earned. (165, 466)

Front 73

Deferred Tax Items  

Back 73

Timing differences caused by reporting revenues and expenses according to GAAP on a company's income statement and according to the Internal Revenue Code on the tax return. (481)

Front 74

Depletion  

Back 74

Systematic and rational allocation of the cost of a natural resource over the period of exploitation. (418)

Front 75

Depreciation  

Back 75

Process of allocating the cost of buildings and equipment over their productive lives using a systematic and rational allocation of the cost of property, plant, and equipment (but not land) over their useful lives. (405)

Front 76

Direct Labor  

Back 76

The earnings of employees who work directly on the products being manufactured. (342)

Front 77

Direct Method  

Back 77

The method of presenting the operating activities section of the statement of cash flows reporting components of cash flows from operating activities as gross receipts and gross payments. (647)

Front 78

Discontinued Operations  

Back 78

Financial results from the disposal of a major component of the business and are reported net of income tax effects. (253)

Front 79

Dividends in Arrears  

Back 79

Dividends on cumulative preferred stock that have not been declared in prior years. (565)

Front 80

Earnings Forecasts  

Back 80

Predictions of earnings for future accounting periods. (227)

Front 81

Effective-Interest Method  

Back 81

Amortizes a bond discount or premium on the basis of the effective-interest rate; it is the theoretically preferred method. (523)

Front 82

Effective-Interest Rate  

Back 82

Another name for the market rate of interest on a bond. (515)

Front 83

Efficient Markets  

Back 83

Securities markets in which prices fully reflect available information. (723)

Front 84

Equity Method  

Back 84

Used when an investor can exert significant influence over an investee. It permits recording the investor's share of investee's income. (608)

Front 85

Estimated Useful Life  

Back 85

Expected service life of an asset to the present owner. (406)

Front 86

Expenses  

Back 86

Decreases in assets or increases in liabilities from ongoing operations incurred to generate revenues during the period. (106)

Front 87

Extraordinary Items  

Back 87

Gains and losses that are both unusual in nature and infrequent in occurrence; they are reported net of tax on the income statement. (254)

Front 88

Extraordinary Repairs  

Back 88

Infrequent expenditures that increase an asset's economic usefulness in the future. (403)

Front 89

Face Amount  

Back 89

Another name for principal or the principal amount of a bond. (512)

Front 90

Factory Overhead  

Back 90

Manufacturing costs that are not raw material or direct labor costs. (342)

Front 91

Financial Accounting Standards Board (FASB)  

Back 91

The private sector body given the primary responsibility to work out the detailed rules that become generally accepted accounting principles. (20)

Front 92

Finished Goods Inventory  

Back 92

Manufactured goods that are completed and ready for sale. (341)

Front 93

First-In, First-Out (FIFO) Method  

Back 93

Assumes that the first goods purchased (the first in) are the first goods sold. (346)

Front 94

Form 10-K  

Back 94

The annual report that publicly traded companies must file with the SEC. (235)

Front 95

Form 10-Q  

Back 95

The quarterly report that publicly traded companies must file with the SEC. (235)

Front 96

Form 8-K  

Back 96

The report used by publicly traded companies to disclose any material event not previously reported that is important to investors. (235)

Front 97

Franchise  

Back 97

A contractual right to sell certain products or services, use certain trademarks, or perform activities in a geographical region. (422)

Front 98

Free Cash Flow  

Back 98

Cash Flows from Operating Activities — Dividends — Capital Expenditures. (667)

Front 99

Future Value  

Back 99

The sum to which an amount will increase as the result of compound interest. (473)

Front 100

Gains  

Back 100

Increases in assets or decreases in liabilities from peripheral transactions. (107)

Front 101

Generally Accepted Accounting Principles (GAAP)  

Back 101

The measurement rules used to develop the information in financial statements. (20)

Front 102

Goods Available for Sale  

Back 102

The sum of beginning inventory and purchases (or transfers to finished goods) for the period. (343)

Front 103

Goodwill (Cost in Excess of Net Assets Acquired)  

Back 103

For accounting purposes, the excess of the purchase price of a business over the market value of the business's assets and liabilities. (420, 616)

Front 104

Gross Profit (Gross Margin)  

Back 104

Net sales less cost of goods sold. (240)

Front 105

Held-to-Maturity Investments  

Back 105

A long-term investments in bonds that management has the ability and intent to hold until maturity. (598)

Front 106

Historical Cost Principle  

Back 106

Requires assets to be recorded at the historical cash-equivalent cost, which on the date of the transaction is cash paid plus the current dollar value of all noncash considerations also given in the exchange. (55)

Front 107

Income before Income Taxes (Pretax Earnings)  

Back 107

Revenues minus all expenses except income tax expense. (241)

Front 108

Income from Operations (Operating Income)  

Back 108

Equals net sales less cost of goods sold and other operating expenses. (241)

Front 109

Income Statement (Statement of Income, Statement of Earnings, Statement of Operations)  

Back 109

Reports the revenues less the expenses of the accounting period. (10)

Front 110

Indenture  

Back 110

A bond contract that specifies the legal provisions of a bond issue. (512)

Front 111

Indirect Method  

Back 111

The method of presenting the operating activities section of the statement of cash flows that adjusts net income to compute cash flows from operating activities. (647)

Front 112

Institutional Investors  

Back 112

Managers of pension, mutual, endowment, and other funds that invest on the behalf of others. (229)

Front 113

Intangible Assets  

Back 113

Assets that have special rights but not physical substance. (397)

Front 114

Internal Controls  

Back 114

Processes by which a company provides reasonable assurance regarding the reliability of the company's financial reporting, the effectiveness and efficiency of its operations, and its compliance with applicable laws and regulations. (300)

Front 115

Inventory  

Back 115

Tangible property held for sale in the normal course of business or used in producing goods or services for sale. (340)

Front 116

Investments in Associated (or Affiliated) Companies  

Back 116

are investments in stock held for the purpose of influencing the operating and financing strategies for the long term. (608)

Front 117

Issued Shares  

Back 117

Total number of shares of stock that have been sold; shares outstanding plus treasury shares held. (553)

Front 118

Journal Entry  

Back 118

An accounting method for expressing the effects of a transaction on accounts in a debitsequal- credits format. (63)

Front 119

Last-In, First-Out (LIFO) Method  

Back 119

Assumes that the most recently purchased units (the last in) are sold first. (346)

Front 120

Legal Capital  

Back 120

The permanent amount of capital defined by state law that must remain invested in the business; serves as a cushion for creditors. (555)

Front 121

Lenders (Creditors)  

Back 121

Suppliers and financial institutions that lend money to companies. (230)

Front 122

Liabilities  

Back 122

Probable debts or obligations of the entity that result from past transactions, which will be paid with assets or services. (51, 459)

Front 123

Licenses and Operating Rights  

Back 123

obtained through agreements with governmental units or agencies, permit owners to use public property in performing its services. (422)

Front 124

LIFO Liquidation  

Back 124

A sale of a lowercost inventory item from beginning LIFO inventory. (364)

Front 125

LIFO Reserve  

Back 125

A contra-asset for the excess of FIFO over LIFO inventory. (352)

Front 126

Liquidity  

Back 126

is the ability to pay current obligations. (459)

Front 127

Long-Lived Assets  

Back 127

Tangible and intangible resources owned by a business and used in its operations over several years. (397)

Front 128

Long-Term Liabilities  

Back 128

All of the entity's obligations that are not classified as current liabilities. (470)

Front 129

Losses  

Back 129

Decreases in assets or increases in liabilities from peripheral transactions. (107)

Front 130

Lower of Cost or Market (LCM)  

Back 130

Valuation method departing from the cost principle; it serves to recognize a loss when replacement cost or net realizable value drops below cost. (354)

Front 131

Market Interest Rate  

Back 131

Current rate of interest on a debt when incurred; also called yield or effective-interest rate. (515)

Front 132

Market Tests  

Back 132

Ratios that tend to measure the market worth of a share of stock. (719)

Front 133

Market Value Method  

Back 133

Reports securities are at their current market value. (600)

Front 134

Matching Principle  

Back 134

Requires that expenses be recorded when incurred in earning revenue. (112)

Front 135

Material Amounts  

Back 135

Amounts that are large enough to influence a user's decision. (247)

Front 136

Merchandise Inventory  

Back 136

Goods held for resale in the ordinary course of business. (340)

Front 137

Merger  

Back 137

occurs when one company purchases all of the net assets of another and the target company goes out of existence. (615)

Front 138

Natural Resources  

Back 138

Assets occurring in nature, such as mineral deposits, timber tracts, oil, and gas. (417)

Front 139

Net Book Value (Book Value, Carrying Value)  

Back 139

of an asset is the acquisition cost of the asset less accumulated depreciation, depletion, or amortization. (164, 405)

Front 140

Net Realizable Value  

Back 140

The expected sales price less selling costs (e.g., repair and disposal costs). (355)

Front 141

Noncash Investing and Financing Activities  

Back 141

Transactions that do not have direct cash flow effects; reported as a supplement to the statement of cash flows in narrative or schedule form. (670)

Front 142

No-Par Value Stock  

Back 142

Capital stock that has no par value specified in the corporate charter. (555)

Front 143

Notes (Footnotes)  

Back 143

Provide supplemental information about the financial condition of a company, without which the financial statements cannot be fully understood. (16)

Front 144

Notes Receivable  

Back 144

Written promises that require another party to pay the business under specified conditions (amount, time, interest). (291)

Front 145

Operating Cycle (Cash-to-Cash Cycle)  

Back 145

The time it takes for a company to pay cash to suppliers, sell those goods and services to customers, and collect cash from customers. (103)

Front 146

Operating Lease  

Back 146

does not meet any of the four criteria established by GAAP and does not cause the recording of an asset and liability. (472)

Front 147

Ordinary Repairs and Maintenance  

Back 147

Expenditures for the normal operating upkeep of long-lived assets. (403)

Front 148

Outstanding Shares  

Back 148

Total number of shares of stock that are owned by stockholders on any particular date. (553)

Front 149

Paid-In Capital (Additional Paid-in Capital, Contributed Capital in Excess of Par)  

Back 149

is the amount of contributed capital less the par value of the stock. (238)

Front 150

Par Value  

Back 150

(1) A legal amount per share established by the board of directors; 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. (238, 512, 555)

Front 151

Parent Company  

Back 151

The entity that gains a controlling influence over another company (the subsidiary). (614)

Front 152

Patent  

Back 152

Granted by the federal government for an invention; gives the owner the exclusive right to use, manufacture, and sell the subject of the patent. (421)

Front 153

Payment Date  

Back 153

The date on which a cash dividend is paid to the stockholders of record. (560)

Front 154

Percentage of Credit Sales Method  

Back 154

Bases bad debt expense on the historical percentage of credit sales that result in bad debts. (294)

Front 155

Periodic Inventory System  

Back 155

Ending inventory and cost of goods sold determined at the end of the accounting period based on a physical inventory count. (361)

Front 156

Permanent (Real) Accounts  

Back 156

The balance sheet accounts that carry their ending balances into the next accounting period. (179)

Front 157

Perpetual Inventory System  

Back 157

A detailed inventory record maintained recording each purchase and sale during the accounting period. (361)

Front 158

Post-Closing Trial Balance  

Back 158

Should be prepared as the last step in the accounting cycle to check that debits equal credits and all temporary accounts have been closed. (180)

Front 159

Preferred Stock  

Back 159

Stock that has specified rights over common stock. (564)

Front 160

Present Value  

Back 160

The current value of an amount to be received in the future; a future amount discounted for compound interest. (473)

Front 161

Press Release  

Back 161

A written public news announcement normally distributed to major news services. (232)

Front 162

Primary Objective of External Financial Reporting  

Back 162

Provides useful economic information about a business to help external parties make sound financial decisions. (49)

Front 163

Private Investors  

Back 163

Individuals who purchase shares in companies. (230)

Front 164

Purchase Discount  

Back 164

Cash discount received for prompt payment of an account. (367)

Front 165

Purchase Method  

Back 165

records assets and liabilities acquired in a merger or acquisition at their fair market value. (616)

Front 166

Purchase Returns and Allowances  

Back 166

A reduction in the cost of purchases associated with unsatisfactory goods. (367)

Front 167

Ratio (Percentage) Analysis  

Back 167

An analytical tool that measures the proportional relationship between two financial statement amounts. (707)

Front 168

Raw Materials Inventory  

Back 168

Items acquired for the purpose of processing into finished goods. (341)

Front 169

Record Date  

Back 169

The date on which the corporation prepares the list of current stockholders as shown on its records; dividends can be paid only to the stockholders who own stock on that date. (560)

Front 170

Relevant Information  

Back 170

Information that can influence a decision; it is timely and has predictive and/or feedback value. (231)

Front 171

Reliable Information  

Back 171

Information that is accurate, unbiased, and verifiable. (231)

Front 172

Replacement Cost  

Back 172

The current purchase price for identical goods. (354)

Front 173

Report of Independent Accountants (Audit Report)  

Back 173

Describes the auditors' opinion of the fairness of the financial statement presentations and the evidence gathered to support that opinion. (22)

Front 174

Residual (or Salvage) Value  

Back 174

Estimated amount to be recovered, less disposal costs, at the end of the company's estimated useful life of an asset. (406)

Front 175

Retained Earnings  

Back 175

Cumulative earnings of a company that are not distributed to the owners and are reinvested in the business. (53)

Front 176

Revenue Expenditures  

Back 176

Expenditures that maintain the productive capacity of an asset during the current accounting period only and are recorded as expenses. (403)

Front 177

Revenue Principle  

Back 177

Revenues are recognized when goods or services are delivered, there is evidence of an arrangement for customer payment, the price is fixed or determinable and collection is reasonably assured. (109)

Front 178

Revenues  

Back 178

Increases in assets or settlements of liabilities from ongoing operations. (104)

Front 179

Sales (or Cash) Discount  

Back 179

Cash discount offered to encourage prompt payment of an account receivable. (286)

Front 180

Sales Returns and Allowances  

Back 180

Reduction of sales revenues for return of or allowances for unsatisfactory goods. (288)

Front 181

Securities and Exchange Commission (SEC)  

Back 181

The U.S. government agency that determines the financial statements that public companies must provide to stockholders and the measurement rules that they must use in producing those statements. (20)

Front 182

Securities Available for Sale  

Back 182

All passive investments other than trading securities (classified as either shortterm or long-term). (601)

Front 183

Separate-Entity Assumption  

Back 183

States that business transactions are separate from the transactions of the owners. (50)

Front 184

Specific Identification Method  

Back 184

Identifies the cost of the specific item that was sold. (345)

Front 185

Stated Rate  

Back 185

The rate of cash interest per period specified in the bond contract. (512)

Front 186

Statement of Cash Flows  

Back 186

Reports inflows and outflows of cash during the accounting period in the categories of operating, investing, and financing. (14)

Front 187

Statement of Retained Earnings  

Back 187

Reports the way that net income and the distribution of dividends affected the financial position of the company during the accounting period. (13)

Front 188

Stock Dividend  

Back 188

Distribution of additional shares of a corporation's own stock. (562)

Front 189

Stock Split  

Back 189

An increase in the total number of authorized shares by a specified ratio; does not decrease retained earnings. (563)

Front 190

Stockholders' Equity (Owners' Equity or Shareholders' Equity)  

Back 190

The financing provided by the owners and the operations of the business. (52)

Front 191

Straight-Line Amortization  

Back 191

Simplified method of amortizing a bond discount or premium that allocates an equal dollar amount to each interest period. (520)

Front 192

Straight-Line Depreciation  

Back 192

Method that allocates the cost of an asset in equal periodic amounts over its useful life. (407)

Front 193

Subsidiary Company  

Back 193

The entity that is acquired by the parent company. (614)

Front 194

T-account  

Back 194

A tool for summarizing transaction effects for each account, determining balances, and drawing inferences about a company's activities. (65)

Front 195

Tangible Assets  

Back 195

(or fixed assets)Assets that have physical substance. (397)

Front 196

Technology  

Back 196

includes costs for computer software and Web development. (421)

Front 197

Temporary (Nominal) Accounts  

Back 197

Income statement (and sometimes dividends declared) accounts that are closed to Retained Earnings at the end of the accounting period. (179)

Front 198

Temporary Differences  

Back 198

Timing differences that cause deferred income taxes and will reverse, or turn around, in the future. (481)

Front 199

Tests of Liquidity  

Back 199

Ratios that measure a company's ability to meet its currently maturing obligations. (714)

Front 200

Tests of Profitability  

Back 200

compare income with one or more primary activities. (709)

Front 201

Tests of Solvency  

Back 201

Ratios that measure a company's ability to meet its longterm obligations. (718)

Front 202

Time Period Assumption  

Back 202

The long life of a company can be reported in shorter time periods. (104)

Front 203

Time Value of Money  

Back 203

Interest that is associated with the use of money over time. (464)

Front 204

Trademark  

Back 204

An exclusive legal right to use a special name, image, or slogan. (421)

Front 205

Trading Securities  

Back 205

All investments in stocks or bonds that are held primarily for the purpose of active trading (buying and selling) in the near future (classified as short-term). (601)

Front 206

Transaction Analysis  

Back 206

The process of studying a transaction to determine its economic effect on the business in terms of the accounting equation. (58)

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Transaction  

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(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. (56)

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Treasury Stock  

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A corporation's own stock that has been issued but was subsequently reacquired and is still being held by that corporation. (558)

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Trial Balance  

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A list of all accounts with their balances to provide a check on the equality of the debits and credits. (163)

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Trustee  

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An independent party appointed to represent the bondholders. (513)

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Unit-of-Measure Assumption  

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States that accounting information should be measured and reported in the national monetary unit. (50)

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Units-of-Production Depreciation  

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Method that allocates the cost of an asset over its useful life based on its periodic output related to its total estimated output. (408)

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Unqualified (Clean) Audit Opinion  

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Auditors' statement that the financial statements are fair presentations in all material respects in conformity with GAAP. (226)

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Unrealized Holding Gains and Losses  

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Amounts associated with price changes of securities that are currently held. (600)

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Work in Process Inventory  

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Goods in the process of being manufactured. (341)

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Working Capital  

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The dollar difference between total current assets and total current liabilities. (468)

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Yield (Effective Interest Rate)  

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is the current rate of interest on a debt when incurred. (515)