Accounting Midterm

Front 1

GAAP

Back 1

Generally Accepted Accounting Principals||Financial Accounting Standards Board||oldAICPA||SEC

Front 2

Cash Accounting

Back 2

when cash is transferred

Front 3

Matching Principle

Back 3

revenue, costs, and expenses when they occur

Front 4

Balance Sheet

Back 4

snap shot

Front 5

Income Statement

Back 5

revenue, cost, expense and proft

Front 6

Cash Flow Statement

Back 6

involved or influenced cash but not on income statement

Front 7

Sales Allowance

Back 7

discretionary discount netted from sales

Front 8

Warranty Allowance

Back 8

estimated expense recurring

Front 9

Cash Discounts/Sales Discounts

Back 9

cost of terms offered by the seller for prompt payment-netted from sales

Front 10

Perpetual Inventory System

Back 10

continuous record of purchased and sold inventory

Front 11

FIFO

Back 11

increases income reported and taxes paid, assuming rising prices

Front 12

LIFO

Back 12

decreases income and taxes, assuming rising prices||current cost principle

Front 13

Lower of cost or market

Back 13

loss on the valuation of inventory expensed

Front 14

Freight In

Back 14

cost of getting goods to the seller

Front 15

Freight Out

Back 15

cost of getting goods to the consumer

Front 16

Gross Profit/Gross Margin/Gross Income

Back 16

Sales-COGS

Front 17

Profit Margin

Back 17

Selling price-cost/selling price

Front 18

Markup

Back 18

selling price-cost/cost

Front 19

Expenses

Back 19

not matched with sales, matched with time period

Front 20

Net Income/Net Profit/Earnings/Bottom Line

Back 20

gross profit - expenses (after taxes)

Front 21

FOB

Back 21

free on board/freight on board-point to which shipper pays shipping charges/ownership transfers

Front 22

Secured Sale

Back 22

exchange for promissory note

Front 23

Floor Plan Sale

Back 23

financed 3rd party/recourse to seller

Front 24

Expenses

Back 24

costs that contribute to the creation of revenue

Front 25

Expense Allocation

Back 25

allocation of General and Administrative expenses to operating units

Front 26

Sources of Financial Info

Back 26

Ann. Report, 10-K, S&P, Moody's, Value Line, Investors Business Daily

Front 27

Contribution Margin/Unit Contribution/Cont. to Overhread and Profit

Back 27

selling price-COGS+variables
-fixed=net profit
# of units/net profit=unit cont.

Front 28

Expense vs. Capitalize

Back 28

charge to current year or spread over useful life

Front 29

Depreciation

Back 29

must be a useful life of over 1 year

Front 30

Book Value

Back 30

asset cost-accum. depric.=BV

Front 31

Capitalization Policy

Back 31

sets a $ below which no depreciation but expense in year purchased

Front 32

Income Statement

Back 32

revenue and expenses||profit from operations over a period

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Operating Income

Back 33

normal business income before irregularities

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EBITDA

Back 34

earning before interest, taxes, depreciation and amortization

Front 35

Earnings per share

Back 35

net income/# of shares

Front 36

Balance Sheet

Back 36

snapshot||assets-liabilities=net worth or equity

Front 37

Current Assets

Back 37

cash in next 12 months||cash, equivalents, AR, inventory, pre-paid expenses

Front 38

Property, Plant & Equipment

Back 38

Fixed Assets or Equipment and Furnishings (cost-accum. deprec.) Land is shown at cost

Front 39

Intangible Assets

Back 39

soft assets||patents, merger costs, cost-accum. amort.

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Goodwill

Back 40

purchase or reorganization asset, amortizes

Front 41

Other Assets

Back 41

rent or lease deposits, investments in other companies, loans to related companies, loans to owners

Front 42

Current Liabilities

Back 42

paid in 12 months||AP, Accrued Payroll, Accrued Expenses, Customer Deposits

Front 43

Current Portion of Long Term Debt

Back 43

due in next 12 months

Front 44

Long Term Liabilities

Back 44

more than 1 year, Promissory notes, leases, bonds, etc.

Front 45

Equity/Owner's Equity/Stockholder's Equity/Capital/Net Assets/Net Worth/ Book Value

Back 45

Assets-Liabilities at cost. true net may be more or less than cost

Front 46

Capital Stock (Par Value)

Back 46

nominal amount paid by investors for stock/not actual amount

Front 47

Retained Earnings

Back 47

accumulated net income-dividends

Front 48

Contributed Capital or Additional Paid-In Capital

Back 48

amount over par value paid for stock

Front 49

Working Capital

Back 49

current assets-current libailities

Front 50

Liquidity

Back 50

cash and assets quickly converted||quick ratio-like working capital but 90 day cap

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Insolvency

Back 51

opposite of liquidity, negative liquidity

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Equity

Back 52

value of owner's interests, ties income statement to balance sheet

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General Partner

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active manager

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Limited Partner

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limited liability investor

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Joint Venture

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dissolved after completion of said project

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Corporation

Back 56

state chartered legal person with unlimited life, common stock and limited liability ownership

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LLC

Back 57

liability based on investment, individual investors pay income tax

Front 58

C-corps

Back 58

pay corporate taxes (nearly all publicly traded companies)

Front 59

S-corps

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like LLCs, investors pay taxes

Front 60

Preferred Stock

Back 60

paid before common stock, amount of dividend determined by legal agreement

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Book Value per Share

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equity (from BS)/# of shares

Front 62

Market Value of Common Stack

Back 62

what someone is willing to pay for it

Front 63

Market Cap

Back 63

# of shares x market price per share

Front 64

Liquidation Value

Back 64

sold assets-paid liabilities=net value

Front 65

Cap Rate

Back 65

earnings or cash flow/desired return(Cap Rate)=Company Value

Front 66

Cash Cycle/Cash Flow Cycle/Cash Conversion Cycle/Operating Cycle

Back 66

time between cash disbursement and cash collection

Front 67

Leverage

Back 67

using outside investment to make more money than you can with owner's capital

Front 68

Accounts Receivable Financing

Back 68

pledging AR to lenders in exchange for cash loans

Front 69

Cap Expenditures

Back 69

amount spent for all fixed assets not charged to expense but on balance sheet. depreciations.