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38 Cards in this Set
- Front
- Back
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business owned by one person |
sole proprietorship
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business owned by two or more people |
partnership |
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business organized as a separate legal entity owned by stockholders |
corporation |
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users within the organization |
internal users |
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users outside the organization |
external users |
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assets = liabilities + stockholders' equity |
standard basic accounting equation |
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things that are owned/ provide future benefit |
assets |
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debts or obligations |
liabilities |
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ownership claim on total assets |
stockholders' equity |
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includes revenues and expenses |
operating activities |
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cash raised through operating and financing activities is used for investing in resources needed to operate the business |
investing activities |
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cash often obtained from outside sources to start or expand a business (bonds payable, notes payable, accounts payable) |
financing activities |
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amounts of cash paid to stockholders |
dividend |
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reports the success/ failures of the company in that time period ; dated like a video |
income statement |
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reports the amount paid in dividends and amount of net income or loss for the period ; dated like a video |
retained earnings statement |
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shows the relationship between assets and equities at a specific point in time ; dated like a picture |
balance sheet |
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financial statements, management discussion and analysis, notes to financial statements, auditor's report |
What are the elements of an annual report? |
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the average time it takes from the purchase of inventory to the collection of cash from the sale of that inventory from customers |
operating cycle of a business |
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measures the income or operating success of a company for a given period of time |
profitability ratio |
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measures short-term ability of the company to pay its current liabilities and unexpected needs for cash |
liquidity ratio |
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measure the ability of a company to survive over a long period of time |
solvency ratios |
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measures the net income earned on each share of common stock |
earnings per share |
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type of liquidity ratio; current assets/current liabilities |
current ratio |
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current assets - current liabilities |
working capital |
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a set of rules and practices that the accounting profession recognizes as a general guide for financial reporting purposes |
Generally Accepted Accounting Principles (GAAP) |
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record assets at their cost and maintain at their cost |
Historical Cost Principle |
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the two sided affect of each transaction; debit and credit |
double-entry system |
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documents that provide evidence of the transaction (receipts, checks, bills, etc.) |
source documents |
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book of original entry; transactions recorded in chronological order |
General Journal |
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1. Enter date of transaction 2. Account Debited / Amount 3. Account credited / Amount 4. Brief Explanation |
What are the steps in journalizing? |
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contains the entire group of accounts maintained by a company |
General Ledger |
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listing of accounts used by a company to record transactions |
Charts of Accounts |
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1. Analyze Source Documents 2. Record in General Journal 3. Classify in General Ledger 4. Summarize Trial Balance 5. Report in Financial Statements 5. Interpret in Financial Statement Analysis |
What is the Accounting Process? |
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cash or assets that will be converted to cash after one year or the normal operating cycle of a business |
current asset |
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investments in stocks and bonds of other companies that are held for more than one year |
long term investment |
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the process of allocating the cost of an asset over its useful life |
depreciation |
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debts of obligations that will be paid off in one year or the normal operating cycle |
current liabilities |
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debts of obligations expected to be paid off after one year or the normal operating cycle |
long term liabilities |
