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Definition
Opportunity, Pressure, Rationalization |
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Not an objective of internal control system |
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Definition
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Term
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Definition
managers setting proper "tone at the top" is which component of internal control |
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Definition
Ensuring that different employees have responsibilities for handling cash, record-keeping of cash, and approval of cash transactions is part of which internal control procedure. |
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Definition
Two or more ppl working together to overcome internal control |
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Term
Fraudulent financial reporting |
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Definition
Wrong doing is committed when chief financial officer (CFO) of a corporation records sales revenue that has not actually been earned |
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Adequate documents and records |
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Definition
control activity that is illustrated by requiring the use of pre-numbered checks and sales invoices. |
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Definition
Considered to be the best as it states that the financial statements are in conformity with US generally accepted accounting principles |
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Definition
a business entity that has one owner |
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Definition
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a separate legal entity; double taxation |
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Generally Accepted Accounting Principles (GAAP) |
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Definition
rules, principles and concepts established by the accounting profession that govern financial accounting |
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Financial Accounting Standards Board (FASB) |
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Definition
a seven person group primarily responsible for the establishment of standards of financial accounting and reporting |
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Definition
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Term
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Definition
the amount a business owes to third parties |
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International Financial Reporting Standards (IFRS) |
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Definition
accounting standards that are developed by the international accounting standards board. |
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Definition
The business entity concept dictates that the financial affairs of a business organization must be kept separate from the personal financial affairs of the business owner. |
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Reliability or Objectivity Principle |
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Definition
requires that the accounting information for a business be arrived at objectively so that it may be relied upon by outside users. |
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Term
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Definition
States that when a business acquires assets or services, they should be recorded at their actual cost/historical cost. |
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Definition
the amount of assets owned by the stockholders of the company; In stocks its the paid in capital plus retained earnings |
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Term
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Definition
records the impact of a business event as it occurs regardless of whether the transaction affected cash or not |
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Term
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Definition
records expenses when incurred to sell goods or provide services |
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revenue recognition principle |
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Definition
records revenue when it is earned |
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Term
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Definition
any consecutive 12 month period |
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Term
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Definition
receiving cash from a customer before earning it |
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Definition
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Term
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Definition
expense incurred but not paid |
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Definition
bonds that all mature at the same time |
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Term
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Definition
interest rate investors are willing to pay for similar bonds of equal risk |
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Definition
unsecured bonds backed only by the good faith of the borrower |
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Definition
amount of a bonds issue price over its maturity value |
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Definition
bonds that may be converted into the common stock of the issuing company at the option of the investor |
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Definition
amount of a bonds maturity value over its issue price |
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Term
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Definition
interest rate that determines the amount of cash interest the borrower pays and the investor recieves |
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Term
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Definition
bonds in the same bond issuance that mature at different tims |
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Term
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Definition
bonds that the issuer may call of pay off at a specified price whenever the issuer wants |
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Term
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Definition
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Term
accounts receivable turnover |
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Definition
net credit sales/average net accounts receivable |
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Term
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Definition
(cash+net current receivables+short term investments)/total current liabilities |
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Definition
total liabilities/total assets |
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Term
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Definition
Balance sheet that separates assets and liabilities into current and long term classes |
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Term
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Definition
entry affecting more than 2 accounts; has one or more debit or credit |
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Term
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Definition
cost of inventory that business has sold to customers |
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Term
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Definition
document that supports return of goods from customer and the adjustment to customers account balance |
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Term
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Definition
Assets expected to be converted to cash, sold, or consumed within one yr of business operating cycle if cycle is longer than yr |
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Term
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Definition
debts due to be paid with cash or fulfilled with goods and services within one year or the entity's operating cycle if cycle lasts more than 1 yr |
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Term
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Definition
current assets to current liabilities; measure of liquidity |
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Term
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Definition
document that supports return of goods to supplier and adjustment to balance owed to supplier |
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Term
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Definition
Long term assets of company such as land, building, equipment etc... |
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Term
Free on board (FOB) destination |
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Definition
shipping term specifying title to goods passes buyer when goods are recieved at buyers destination; seller pays cost of shipping goods to destination. |
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Free on board (FOB) shipping point |
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Definition
title of goods passes to buyer when goods are shipped at sellers place of business; buyer pays cost shipping goods to its location. |
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Definition
Net sales revenue minus cost of goods sold; gross profit |
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Term
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Definition
measure of profitability equal to gross margin divided by net sales revenue; gross profit percentage |
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Term
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Definition
net sales revenue minus cost of goods sold |
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Term
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Definition
gross profit minus operating expense; operating income |
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Term
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Definition
goods purchased for resale to customers in the normal course of merchandising operations; merchandise inventory |
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Term
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Definition
ability to convert an asset to cash quickly |
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Term
Multi-step income statement |
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Definition
calculates net income or net loss by listing important subtotals such as gross profit and operating income. |
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Term
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Definition
sales revenue less sales discounts and sales returns and allowances. |
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Term
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Definition
time span during which business obtains resources, uses them to sell goods and services to customers and collects cash from these customers. |
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Term
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Definition
expenses of operating business other than cost of goods sold; depreciation, rent, salaries, utilities etc... |
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Periodic Inventory system |
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Definition
business does not keep continuous record of inventory on hand. At end of period , physical count of inventory is taken and determines inventory owned as well as cost of goods sold. |
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Term
Perpetual inventory system |
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Definition
continuous record of inventory on hand and cost of goods sold. |
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Term
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Definition
Long lived assets of business; land, buildings, furniture etc.. |
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Term
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Definition
discount received on purchases by paying early with discount period |
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Term
Purchase returns and allowances |
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Definition
reduction in amount owed for purchase due to returning merchandise or accepting damaged goods. |
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Term
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Definition
balance sheet format that reports assets at the top of the report, followed by liabilities, and ending with stockholders equity at the end of the report. |
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Term
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Definition
buy goods from manufacturer/wholesaler and resell them to general public |
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Term
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Definition
discount on sales for customers early payment within a discount period; a contra account to sales revenue |
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Term
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Definition
bill that documents sale of goods to business customer. |
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Term
Sales returns and allowances |
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Definition
reduction in amount of sales due to customers returning merchandise or accepting damaged goods; contra account to sales revenue |
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Term
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Definition
expenses related to advertising and selling products including sales salaries, sales commission, advertising etc... |
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Single Step income statement |
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Definition
groups all revenues together and lists all expenses together, subtracting total expenses from total revenues and calculating net income or net loss without computing any subtotals |
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Term
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Definition
accounting record that contains details such as list of customers and the accounts receivable due from each, or a list of suppliers and the accounts payable due to each. |
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Term
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Definition
buy goods from manufacturer and resell to retailers. |
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Term
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Definition
inventory costing method where after each purchase of inventory, a new weighted average cost per unit is computed and used to values ending inventory and cost of goods sold |
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Term
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Definition
business must report all items in financial statements at amounts that lead to the most cautious immediate results. |
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Term
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Definition
business should use same accounting methods and procedures from period to period. |
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Term
Cost of goods available for sale |
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Definition
cost of inventory on hand at the beginning of the period plus the net cost of inventory purchased during the period. |
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Term
First-in, First-out (FIFO) |
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Definition
first inventory costs incurred are the first costs to be assigned to cost of goods sold; FIFO leaves in ending inventory the last, the most recent, costs incurred. |
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Term
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Definition
disclosures that accompany the financial statements |
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Term
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Definition
Company's financial statements should report enough info for users to make knowledgable decisions about the company |
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Term
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Definition
estimating inventory by estimating gross profit, using estimated gross profit to estimate cost of goods sold, and using estimated cost of goods sold to estimate ending inventory |
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Term
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Definition
record of the quantity of and the cost of inventory items made in a single purchase. |
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Term
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Definition
ratio of cost of goods sold to average inventory |
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Term
Last-in, First-out (LIFO) |
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Definition
last inventory costs incurred are the first costs to be assigned to cost of goods sold; Leaves in ending inventory the first, the oldest, costs incurred. |
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Lower of cost or market (LCM) rule |
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Definition
rule that business must report inventory in the financial statements at whichever is lower, the historical cost or market value of each inventory item. |
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Term
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Definition
Company must perform strict proper accounting only for items that are significant for the business's financial statements. Info is significant, or material, when its presentation in the financial statements would cause someone to change a decision |
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Term
Perpetual inventory record |
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Definition
tracks quantity of, and cost assigned to, inventory items as they are purchased and sold. |
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Term
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Definition
Inventory items used in the production of goods |
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Term
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Definition
business uses specific cost of each unit of inventory; also called Specific Identification |
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Term
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Definition
inventory of partially completed good, |
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Term
Gross Profit Percentage (equation) |
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Definition
(Gross Profit)/(Net Sales Revenue) |
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Term
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Definition
(Current Assets)/(Current Liabilities) |
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Term
Inventory Turnover (equation) |
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Definition
(Cost of goods sold)/((Beginning Inventory+Ending Inventory)/2) |
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Term
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Definition
Allocating a plant assets cost to expense over its useful life; Factors:cost, estimated useful and residual life. |
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Term
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Definition
Straight-line-for assets generating rev. evenly over time. units-of-production-for assets that depreciate due to wear and tear declining-balance-for assets that produce more rev. in their early yrs |
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Term
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Definition
Recorded as debit to assets Two types:Extraordinary repairs- extends useful life of asset; Betterments-increase capacity or productivity |
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Term
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Definition
Convey special rights to owners (no physical form) and cost amortized to expense over useful life Specific intangibles:Patent, copyright, trademarks and brand names |
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Term
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Definition
Known, estimated, contingent liabilities. |
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Term
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Definition
amount that must be paid back at maturity date |
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Term
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Definition
Arise from past events and dependent on outcome of future event; example:pending litigation, potential fines etc.. |
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Term
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Definition
date when principal must be repaid to bondholders |
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Term
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Definition
determines cash interest payment; printed on bond; remains constant |
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Term
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Definition
investors willing to pay for similar bonds of equal risk; often differs from stated rate when issued |
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Term
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Definition
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Term
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Definition
Stated rate less than market rate |
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Term
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Definition
Market rate less than stated rate |
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Term
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Definition
Amounts received from stockholders; common stock is main source; externally generated resulting from transactions w/ outsiders. |
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Term
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Definition
owners have certain advantages over common stock; receive dividends earlier and receive assets before common. |
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Term
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Definition
Stockholders Equity that cannot be used for dividends; maintained for protection of creditors |
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Term
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Definition
company buys back its own stock; buy when price is low and sell when high, support stock price, avoid takeover, reward employees with stock. |
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Term
Financial statement preparation order |
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Definition
Income statement, Statement of retained earnings, balance sheet, statement of cash flows. |
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Term
Research and development costs |
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Definition
generally expensed and become part of income statement |
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Term
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Definition
Excess of cost of the purchase of a business over the market value of its net assets. |
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Term
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Definition
obligation resulting from an event that has not yet occurred |
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Term
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Definition
agreement in which one party (lessee) agrees to pay another (lessor) for the use of an asset |
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Term
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Definition
treated as rental agreement with the lessee recognizing rent expense |
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Term
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Definition
financial arrangement w/ lessee capitalizing the asset and recognizing depreciation expense Criteria-transfer title at end of lease, bargain purchase option, lease term>75% of useful life. |
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Term
Estimated warranty liability |
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Definition
expense recorded same period the revenue related to warranty is recorded (expense incurred when sale is made); amount of warranty claims filed for a period is unknown so it must be estimated. |
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Term
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Definition
Stock in the hands of stockholders |
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Term
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Definition
capital earned through operation of business |
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