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50 Cards in this Set
- Front
- Back
Accrual Basis
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Method of accounting that recognizes revenue when earned, rather than when collected. Expenses are recognized when incurred rather than when paid.
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Accumulated Depreciation
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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.
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Additional Paid In Capital
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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.
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Adverse Opinion
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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).
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Affiliated Company
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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.
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Annual Report
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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.
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Annuity
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Series of payments, usually payable at specified time intervals.
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Audit Engagement
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Agreement between a CPA firm and its client to perform an audit.
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Balance
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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.
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Capital
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Assets intended to further production. The amount invested in a proprietorship, partnership, or corporation by its owners.
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Capital Gain
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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.
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Capitalized Cost
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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.
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Capitalized Interest
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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.
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Cash Basis
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Method of bookkeeping by which revenues and expenditures are reported when they are received and paid.
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Cash Flows
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Net of cash receipts and cash disbursements relating to a particular activity during a specified accounting period.
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Common Stock
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Capital stock having no preferences generally in terms of dividends, voting rights or distributions.
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Consolidated Financial Statements
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Combined financial statements of a parent company and one or more of its subsidiaries as one economic unit.
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Consolidation
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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.
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Control Risk
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Measure of risk that errors exceeding a tolerable amount will not be prevented or detected by an entity's internal controls.
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Cost Accounting
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Procedures used for rationally classifying, recording, and allocating current or predicted costs that relate to a certain product or production process.
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Current Value
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(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.
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Deferred Income
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Income received but not earned until all events have occurred. Deferred income is reflected as a liability.
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Depreciation
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Expense allowance made for wear and tear on an asset over its estimated useful life.
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Disclosure
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Process of divulging accounting information so that the content of financial statements is understood.
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Distributions
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Payment by a business entity to its owners of items such as cash assets, stocks, or earnings.
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Equity
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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.
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Escrow
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Money or property put into the custody of a third party for delivery to a grantee, only after fulfillment of specified conditions.
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Ethics
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The process of determining how one should hold the interests of various stakeholders, taking into account moral values/principles.
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External Reporting
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Reporting to stockholders and the public, as opposed to in internal reporting for management's benefit.
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Fair Market Value
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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.
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Financial Statements
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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.
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Income Statement
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Summary of the effect of revenues and expenses over a period of time.
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Insolvent
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When an entity's liabilities exceed its assets.
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Internal Control
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Process designed to provide reasonable assurance regarding achievement of various management objectives such as the reliability of financial reports.
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Junk Bonds
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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."
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Letter of Credit
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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.
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Limited Liability Company (LLC)
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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.
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Limited Liability Partnership (LLP)
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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.
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Management Accounting
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Reporting designed to assist management in decision–making, planning, and control. Also known as Managerial Accounting.
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Net Assets
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Excess of the value of securities owned, cash, receivables, and other assets over the liabilities of the company.
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Net Income
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Excess or deficit of total revenues and gains compared with total expenses and losses for an accounting period.
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Net Sales
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Sales at gross invoice amounts less any adjustments for returns, allowances, or discounts taken.
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Present Value
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Current value of a given future cash flow stream, discounted at a given rate.
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Pro Forma
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Presentation of financial information that gives effect to an assumed event (e.g., merger).
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Pro Rata
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Distribution of an expense, fund, or dividend proportionate with ownership.
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Revenues
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Sales of products, merchandise, and services; and earnings from interest, dividends, rents.
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Risk Management
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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.
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Security
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Any kind of transferable certificate of ownership including equity securities and debt securities.
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Tax
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Charge levied by a governmental unit on income, consumption, wealth, or other basis.
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Working Capital
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Excess of current assets over current liabilities.
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