Term
|
Definition
managers who plan organize and run a business |
|
|
Term
|
Definition
an information system that IDENTIFIES MEASURES RECORDS AND COMMUNICATES the economic events of an organization to interested users |
|
|
Term
|
Definition
investors, creditors, IRS, regulatory agencies, customers, labor unions, economic planners |
|
|
Term
|
Definition
generally accepted accounting principles established by SEC and FASB |
|
|
Term
|
Definition
gov agency that requires companies to file financial reports following GAAp |
|
|
Term
|
Definition
private org. that establishes broad reporting standards and specific accounting rules |
|
|
Term
|
Definition
assets should be recorded at their cost; value exchanged at time something is acquired (as opposed to market value) |
|
|
Term
|
Definition
only transactions that can be expressed in terms of money are to be included in the acc. records. added assumption: unit of measure remains sufficiently constant over time |
|
|
Term
Economic Entity Assumption |
|
Definition
the activities of the entity are to be kept separate and distinct from the activities of its owner and all other entities |
|
|
Term
|
Definition
business owned by one person, small amount of capital
unlimited liability |
|
|
Term
|
Definition
business owned by 2 or more people associated as partners
unlimited liability (responsible for partner's actions too) |
|
|
Term
|
Definition
a business organized as a separate legal entity (provides protection limited liability) under state corporation law and having ownership divided into transferable shares of stock |
|
|
Term
|
Definition
resources owned by business *cash *accounts recievable *supplies *equipment |
|
|
Term
|
Definition
claims to those to whom money is owed (creditors) existing debts and obligations |
|
|
Term
|
Definition
claims of owners (what owners have invested in the company) Includes common stock, Retained Earnings, Dividends, Revenues, and Expenses |
|
|
Term
FASB objectives of financial reporting |
|
Definition
provide info that is: useful to those making investment and credit decisions is helpful in assessing future cash flows identifies the economic resources (assets), liabilities and the changes in those resources and claims |
|
|
Term
Qualitative characteristics of Acc info (4) |
|
Definition
relevance, reliability, comparability, consistency |
|
|
Term
|
Definition
predictive value (helps forcast) or feedback value (confirms or corrects prior expectations) |
|
|
Term
FASB conceptual framework |
|
Definition
1. Objectives of financial reporting 2. Qualitative characteristics of Accounting Info 3. Elements of Financial Statements 4. Operating Guidelines |
|
|
Term
|
Definition
the economic life of a business can be divided into artificial time periods |
|
|
Term
|
Definition
The enterprise will continue in operation long enough to carry out its existing objectives |
|
|
Term
Revenue Recognition Principle |
|
Definition
revenue should be recognized in the accounting period in which it is earned |
|
|
Term
Matching Principle (expense Recognition) |
|
Definition
Expenses are matched with revenues in the period in which efforts are made to generate revenues Recognized when labor or product contributes to revenue |
|
|
Term
Full disclosure Principle |
|
Definition
circumstances and events that make a difference to financial statement users should be disclosed |
|
|
Term
|
Definition
current assets-current liabilities |
|
|
Term
profit margin percentage (and eqn) |
|
Definition
percentage of each dollar ot sales that results in net income
net income/net sales |
|
|
Term
|
Definition
company's profitability
net income/total assets |
|
|
Term
Return on Common Stockholder's equity |
|
Definition
measures profitability from common stockholder's viewpoint
net income/ common equity
common equity=initial and subsequent investments |
|
|
Term
|
Definition
measures enterprise's longevity |
|
|
Term
Debt to total assets ratio |
|
Definition
total debt/total assets
higher ration = greater risk that the company may be unable to meet its maturity obligatoins
lower ratio= greater buffer available to creditors should the company become insolvent |
|
|
Term
|
Definition
International Accounting Standards Board working toward development of a single set of high-quality global accounting standards for multinational corporations |
|
|
Term
debits cause increases in which accounts |
|
Definition
Expenses, Assets, Dividends |
|
|
Term
debits cause decreases in which accounts |
|
Definition
Retained Earnings, Revenues, liabilites, and common stock |
|
|
Term
elements of a general journal (4) |
|
Definition
transaction date, account titles and explainations, references, 2 amount columns (debit and credit) |
|
|
Term
Steps in the recording Process |
|
Definition
1. Analyze each transaction for its effects on the accounts 2. Enter the transaction information in a journal (book of original entry) 3. Transfer the journal information to the appropriate accounts in the ledger (book of accounts) |
|
|
Term
|
Definition
accounting time period begins on 1st day of month and ends 12 months later on the last day of the month |
|
|
Term
|
Definition
transaction that change a company's financial statements are recorded in the period in which the events occur recognizes revenues when earned rather than when the cash is recieved |
|
|
Term
|
Definition
revenue is recorded when cash is received |
|
|
Term
Types of adjusting entries |
|
Definition
prepayments, accruals (revenues and expenses) |
|
|
Term
Formula for computing interest |
|
Definition
face value of note * annual interest rate *time in terms of 1 yr (1/12) = Interest |
|
|