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48 Cards in this Set

  • Front
  • Back
sole proprietorship
business entity with single owner. has owner's equity.
partnership
business entity owned by two or more individuals with characteristic of unlimited liability. has owners equity.
corporation
business entity organized under laws of particular state. Ownership evidenced by shares of stock. has stockholders equity.
assets
future economic benefit. Found on balance sheet. Ca, LTA
liabilities
obligation of a business. found on a balance sheet. CL, LTL
owner's equity
owners claim on the assets of the entity. includes retained earnings and capital stock (invested money)
revenue
inflow of assets resulting from sale of good and services. part of net income. goes on income statement. (SALES, FEES EARNED, ___ REVENUE, COMMISSIONS EARNED)
expenses
outflows fo assets or incurences of liability resulting form delivering goods, rendering services, or carryout out other activities (ADVERTISING, SALARIES and WAGES, COMMISSION EXPENSES, GAS and UTILITIES, COST OF MANUFACTURING, RENT)
going concern
assumption that an entiity is not in process of liquidation and that it will continue indefinetely
monetary unit
yardstck used to measure amounts in financial statements, dollar in US
cost principal
assets recorded at the cost to require them
time period
artificial segment on the calender, used as the basis for preparing financial statements
understandability
quality of accounting information that makes it comprehensible to those willing to spend the necessary time
relevance
make a difference in users opinion.
reliability
VERIFIABILITY, NEUTRALITY, REPRESENTATIONAL FAITHFULNESS, the quality that makes accounting information dependable in representing the events that it purports to represent
comparability
for accounting information, the quality that allows a user to analyze two or more companies and look for similarities and differences
consistency
for accounting information, quality that allows user to compare two or more accounting periods for a single company
materiality
the MAGNITUDE of an accounting information ommission or mistatement that will affect the judgement of someone relying on the information
conservatism
practice of using the least optimistic estimate when two estimates of amounts are almost equally likely
liquidity
nearness to cash of the assets and liabilities. ability of a company to pay its debts as they come due
operating cycle
cashh-inventory-A/R-cash
period of time between purchase of inventory and collection of any receivables from sale of inventory
working capital
CA-CL
Current ratio
CA/CL
Gross profit
sales - cogs

cost of goods sold are costs of goods available - ending inventory
gross profit ratio
GP/sale
involves 1 expense (cogs)
profit margin
NI/sales
involves mutilple expenses
single step income statement
Revenues-expenses=net income
multi-step income statement
sales-cogs=GP - operating expenses = income from operations +/- revenues/expenses = income before income tax -income tax = net income
relationships btw financial statements
IS (net income) - R/E (end R/E) - BS (total assets{CA+LTA} = total liabilities {CL+LTL} + OE {capital stock + R/E}
controller
cheif accounting officer fro a company
treasurer
officer responsible in an organization for the safeguarding and efficient use of a companys liquid assets
AICPA
AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS professional organization for certified public accountants
SEC
SECURITES AND EXCHANGE COMMISSION federal agency with ultimate authority to determine rules in preparing statements for companies whose stock is sold to the public
FASB
FINANCIAL ACCOUNTING STANDARDS BOARD group in private sector with authority to set accounting standards
accounting
process of indentifying, measuring, and communicating economic information to various users
management accounting
branch of accounting concerned with providing management with information to facilitate planning and control
financial accounting
branch of accounting concerned with preperation of financial statements for outsider use
balance sheet
financial statement that summarizes assets, liabilities, and owners equity at a specific point in time
income statement
financial statement summarizing revenues and expenses
dividends
distribution of net income of a business to its owners
GAAP
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES various methods, rules, practices, and other procedures, evolved over time, in response to need to regulate preperation of financial statements
IASB
INTERNATIONAL ACCOUNTING STANDARDS BOARD organization formed to develop worldwide accounting standards
internal auditing
department responsible in a company for the review and appraisal of its accounting and administrative controls
auditing
process of examining financial statements and the underlying records of a company in order to render an opinion as to whether statements are fairly represented
auditors report
opinion rendered by a public accounting firm concerning fairness of presentation of financial statemetns
American Accounting Association
professional organization for accounting educators
depreciation
process of allocating the cost of a long-term tangible asset over its useful life
corporation
business entity organized under laws of particular state. ownership evidenced by shares of stock. stockholders equity