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50 Cards in this Set

  • Front
  • Back
Accrual Basis
Method of accounting that recognizes revenue when earned, rather than when collected. Expenses are recognized when incurred rather than when paid.
Accumulated Depreciation
Total depreciation pertaining to an asset or group of assets from the time the assets were placed in services until the date of the financial statement or tax return. This total is the contra account to the related asset account.
Additional Paid In Capital
Amounts paid for stock in excess of its par value or stated value. Also, other amounts paid by stockholders and charged to equity accounts other than capital stock.
Adverse Opinion
Expression of an opinion in an auditor's report which states that financial statements do not fairly present the financial position, results of operations and cash flows in conformity with generally accepted accounting principles (GAAP).
Affiliated Company
Company, or other organization related through common ownership, common control of management or owners, or through some other control mechanism, such as a long–term lease.
Annual Report
Report to the stockholders of the company which includes the company's annual, audited balance sheet and related statements of earnings, stockholders' or owners' equity and cash flows, as well as other financial and business information.
Annuity
Series of payments, usually payable at specified time intervals.
Audit Engagement
Agreement between a CPA firm and its client to perform an audit.
Balance
Sum of debit entries minus the sum of credit entries in an account. If positive, the difference is called a debit balance; if negative, a credit balance.
Capital
Assets intended to further production. The amount invested in a proprietorship, partnership, or corporation by its owners.
Capital Gain
Portion of the total gain recognized on the sale or exchange of a noninventory asset which is not taxed as ordinary income. Capital gains have historically been taxed at a lower rate than ordinary income.
Capitalized Cost
Expenditure identified with goods or services acquired and measured by the amount of cash paid for the market value of other property, capital stock, for services surrendered. Expenditures that are written off during two or more accounting periods.
Capitalized Interest
Interest cost incurred during the time necessary to bring an asset to the condition and location for its intended use and included as part of the historical cost of acquiring the asset.
Cash Basis
Method of bookkeeping by which revenues and expenditures are reported when they are received and paid.
Cash Flows
Net of cash receipts and cash disbursements relating to a particular activity during a specified accounting period.
Common Stock
Capital stock having no preferences generally in terms of dividends, voting rights or distributions.
Consolidated Financial Statements
Combined financial statements of a parent company and one or more of its subsidiaries as one economic unit.
Consolidation
Business combination of two or more entities that occurs when the entities transfer all of their net assets to a new entity created for that purpose.
Control Risk
Measure of risk that errors exceeding a tolerable amount will not be prevented or detected by an entity's internal controls.
Cost Accounting
Procedures used for rationally classifying, recording, and allocating current or predicted costs that relate to a certain product or production process.
Current Value
(1) Value of an asset at the present time as compared with the asset's historical cost. (2) In finance, the amount determined by discounting the future revenue stream of an asset using compound interest principles.
Deferred Income
Income received but not earned until all events have occurred. Deferred income is reflected as a liability.
Depreciation
Expense allowance made for wear and tear on an asset over its estimated useful life.
Disclosure
Process of divulging accounting information so that the content of financial statements is understood.
Distributions
Payment by a business entity to its owners of items such as cash assets, stocks, or earnings.
Equity
Residual interest in the assets of an entity that remains after deducting its liabilities. Also, the amount of a business' total assets less total liabilities. Also, the third section of a balance sheet, the other two being assets and liabilities.
Escrow
Money or property put into the custody of a third party for delivery to a grantee, only after fulfillment of specified conditions.
Ethics
The process of determining how one should hold the interests of various stakeholders, taking into account moral values/principles.
External Reporting
Reporting to stockholders and the public, as opposed to in internal reporting for management's benefit.
Fair Market Value
Price at which property would change hands between a buyer and seller without any compulsion to buy or sell, and both having reasonable knowledge of the relevant facts.
Financial Statements
Presentation of financial data including balance sheets, income statements and statements of cash flow, or any supporting statement that is intended to communicate an entity's financial position at a point in time and its results of operations for a period then ended.
Income Statement
Summary of the effect of revenues and expenses over a period of time.
Insolvent
When an entity's liabilities exceed its assets.
Internal Control
Process designed to provide reasonable assurance regarding achievement of various management objectives such as the reliability of financial reports.
Junk Bonds
Debt securities issued by companies with higher than normal credit risk. Considered non–investment grade" bonds, these securities ordinarily yield a higher rate of interest to compensate for the additional risk."
Letter of Credit
Conditional bank commitment issued on behalf of the customer to pay a third party in accordance with certain terms and conditions. The two primary types are commercial letters of credit and standby letters of credit.
Limited Liability Company (LLC)
Form of doing business combining limited liability for all owners (called members) with taxation as a partnership. An LLC is formed by filing articles of organization with an appropriate state official. Rules governing LLCs vary significantly from state to state.
Limited Liability Partnership (LLP)
General partnership which, via registration with an appropriate state authority, is able to enshroud all its partners in limited liability. Rules governing LLPs vary significantly from state to state.
Management Accounting
Reporting designed to assist management in decision–making, planning, and control. Also known as Managerial Accounting.
Net Assets
Excess of the value of securities owned, cash, receivables, and other assets over the liabilities of the company.
Net Income
Excess or deficit of total revenues and gains compared with total expenses and losses for an accounting period.
Net Sales
Sales at gross invoice amounts less any adjustments for returns, allowances, or discounts taken.
Present Value
Current value of a given future cash flow stream, discounted at a given rate.
Pro Forma
Presentation of financial information that gives effect to an assumed event (e.g., merger).
Pro Rata
Distribution of an expense, fund, or dividend proportionate with ownership.
Revenues
Sales of products, merchandise, and services; and earnings from interest, dividends, rents.
Risk Management
Process of identifying and monitoring business risks in a manner that offers a risk/return relationship that is acceptable to an entity's operating philosophy.
Security
Any kind of transferable certificate of ownership including equity securities and debt securities.
Tax
Charge levied by a governmental unit on income, consumption, wealth, or other basis.
Working Capital
Excess of current assets over current liabilities.