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accounting
music business
127
Accounting
Graduate
12/07/2008
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Term
Collects the increases and decreases (transactions & events) for each element.
 Definition
Account
Term
These are the principles, assumptions, and constraints that form the foundation for financial recognition and disclosure.
 Definition
Accounting Concepts
Term
What is the accounting equation?
 Definition
Assets= Liabilities+ Equity
Term
The total amount owed to suppliers/vendors for purchasing their goods or services on account/
 Definition
Accounts payable
Term
The total amount that customers owe the company, from sales on account.
 Definition
Accounts Receivable
Term
Recording revenues when earned and expenses when incurred (or when non-cash resources are USED).
 Definition
Accrual Basis
Term
The accounting process that periodically transfers money from one account to another (e.g. Depreciation).
 Definition
Allocation
Term
Allocates capitalized costs of intangible assets to expense, called amortization expense. Similar to depreciation.
 Definition
Amortize
Term
Probable future economic benefit... = OWN.
 Definition
Asset
Term
Accounting concepts, (ecenomic entity, going concern, monetary unit, and periodicity) that establish reporting requirements.
 Definition
Assumption
Term
The systematic assesment of an entity's conformity with GAAP.
 Definition
Audit
Term
The total increases, less total decreases, to an account.
 Definition
Balance
Term
One of the GAAP required financial statements that reports assets, liabilities, and equity.
 Definition
Balance Sheet
Term
Refers to the underlying theory or value.
 Definition
Basis
Term
A contract that represents a company's borrowing from creditors. Often called a debt security, or fixed income investment.
 Definition
Bond
Term
The balance within an account.
 Definition
Book Value
Term
For accounting it is revenues minus expenses = zero.
 Definition
Breakeven
Term
The investigation of various sales and cost scenarios. For example, what happens to breakeven when fixed costs increase 10%, variable cost per unit by 20%, etc.
 Definition
Breakeven analysis
Term
Any asset used to generate revenue or make a long-term investment.
 Definition
Capital
Term
The process of selecting an investment(s) in capital projects; for example, a factory, or product.
 Definition
Capital Budgeting
Term
The accounting process that records costs as assets.
 Definition
Capitalization
Term
Recording revenue when cash is received and expenses when paid.
 Definition
Cash Basis
Term
Accounting concepts, (materiality, conservatism, cost/benefit, industry practices) that establish reporting requirements.
 Definition
Constraint
Term
Computed on principal and on the interest earned that has not been paid or withdrawn.
 Definition
Compound interest
Term
The difference between the sales price per unit, and the variable cost per unit.
 Definition
Contribution margin per unit
Term
An economic entity with special legal rights. Formed by state laws. Provides limited liability to shareholders.
 Definition
Corporation
Term
Acquisition or exchange price. The initial value of an item.
 Definition
Cost
Term
The accumulation and assignment of costs to objects (e.g. product or service)
 Definition
Cost Accounting
Term
The cost to aquire capital. For example, the interest rate on outstanding debt.
 Definition
Cost of Capital
Term
Cost of the goods or services that were sold to produce sales. Also called Cost of Sales. Includes materials, labor, & overhead.
 Definition
Cost of Goods Sold
Term
The ability to borrow money.
 Definition
Credit
Term
Assets that will be sold, consumed, used, or turned into cash, within one year.
 Definition
Current Assets
Term
Obligations that will be retired within one year using current assets.
 Definition
Current Liability
Term
Current Assets divided by current liabilities.
 Definition
Current ratio
Term
The amount owed to creditors. Total liabilities.
 Definition
Debt
Term
A negative equity balance. More specifically, a negative retained earnings balance.
 Definition
Deficit
Term
Systematic and rational allocation of the capitalized cost of long-lived, tangible asset with an estimated useful life.
 Definition
Depreciation
Term
An investment strategy that decreases risk.
 Definition
Diversify
Term
The return to owners from their investments in the corporation.
 Definition
Dividend
Term
Income; Return; Profit.
 Definition
Earnings
Term
The study of money and markets.
 Definition
Economics
Term
Economic activity can be identified with a particular unit of accountablity.
 Definition
Economic Entity
Term
Asset, Liability, Equity, Revenue, Expense Dividens, Investment by owner.
 Definition
Element
Term
Net worth (finance), Net assets (accounting). The result of subtracting liabilities from assets.
 Definition
Equity
Term
A happening of consequence, An event generally is the source or cause of changes in assets, liabilities, and equity. Events may be external or internal.
 Definition
Event
Term
The use (or incurred) of resources.
 Definition
Expense
Term
A mathematical term that describes the numbers in a multiplication problem. For example, 4 x 3 has two factors: 4 and 3. The answer, 12, is called the product.
 Definition
Factor
Term
Managing Money.
 Definition
Finance
Term
Measuring Money.
 Definition
Financial Accouting
Term
The standard setting body that creates GAAP.
 Definition
Financial Accounting Standard Board (FASB)
Term
Represent the claims to real assets. They include stocks, bonds, and other investment securities.
 Definition
Financial Assets
Term
Financing a company with debt. Issuing/Selling Bonds.
 Definition
Financial Leverage
Term
The basic means of financial reporting. There are four required statments. Balance sheet, Income Statement, Statement of Cash Flows, and Statement of Shareholder's Equity. Also includes Notes.
 Definition
Financial Statement
Term
The property, plant, and qeuipment used by an entity to produce goods and services.
 Definition
Fixed assets.
Term
Those costs that do not change as the number of production/sales units change. Usually represented as a total dollar amount.
 Definition
Fixed costs
Term
Accural basis
 Definition
GAAP Basis
Term
The authoritative literature that specifies the financial reporting objectives for economic entities.
 Definition
Generally Accepted Accounting Principles (GAAP)
Term
Widely used term for sales, minus cost of goods sold (orcost of sales). Also called Gross Margin.
 Definition
Gross Profit
Term
Includes Principal and Interest.
 Definition
Gross Return
Term
The number that is multiplied by the principal, to get Gross Return. For example, 100x 1.1= 110. The Gross Factor is 1.1
 Definition
Gross Return Factor
Term
Record assets and liabilities at cost.
 Definition
Historical cost principle
Term
A general accounting term that represents the difference between revenues and expenses.
 Definition
Income
Term
Revenues minus expenses that were generated from the ongoing major or central operations. Excludes Income tax, and interest expense.
 Definition
Income from Operations
Term
One of the four GAAP required statements. It reports the revenues and expenses of a company.
 Definition
Income statement
Term
Payments of the government. Usually determined as a percentage of net income.
 Definition
Income taxes
Term
Assets without physical exsistence. They represent the rights and privileges of legal ownership. For example, Trademark, Copyright, Franchise, License, etc.
 Definition
Intangible Asset
Term
Cost for the use of money.
 Definition
Interest
Term
A percentage of the outstanding principle; used to determine a return, or cost, for the use of money. Usually reported as an annual rate.
 Definition
Interest Rate
Term
The principles and procedures that ensure the safeguard of assets and accuracy of financial reporting.
 Definition
Internal Controls
Term
The commitment of assets for the purpose of earning a return.
 Definition
Investment
Term
The magnification of a return to a company by efficiently using fixed costs of operations and financing.
 Definition
Leverage
Term
OWE
 Definition
Liability
Term
The ability to convert an asset into cash.
 Definition
Liquidity
Term
An asset that has a useful life beyond one year.
 Definition
Long-Term Asset
Term
A liability that will be extinguished after one year.
 Definition
Long-Term Liability
Term
The analysis of financial information for the benefit of managers to plan, evaluate, and control operations.
 Definition
Managerial Accounting
Term
The difference between two numbers.
 Definition
Margin
Term
The value of a given asset that a willing buyer and seller, in the normal course of business, would agree upon.
 Definition
Market Value
Term
On an income statement, only report those expenses that generated the reported revenues.
 Definition
Matching Principle
Term
Assets minus Liabilities.
 Definition
Net Assets
Term
All revenues minus All expenses.
 Definition
Net Income
Term
A capital budgeting tool that uses the "time value of money" to compute the net (cash-in minus cash-out) present value of all cash flows related to a project.
 Definition
Net Present Value Method.
Term
Net Income, Net Return, Net Earnings
 Definition
Net Profit
Term
Gross return minus principal.
 Definition
Net Return
Term
The number that is multiplied by the principal, that will reult in the net return. Also, the Gross Return Factor minus 1.
 Definition
Net return factor
Term
In Finance: Assets minus Liabilities. The assets are valued at the current market price.
 Definition
Net worth
Term
Written promise to pay. Unlike accounts payable, which is an oral promise to pay.
 Definition
Notes payable
Term
The magnification of earnings from the use of Fixed assets. Increases as fixed costs increase.
 Definition
Operating Leverage
Term
Income from operations.
 Definition
Operating Profit
Term
The benefit sacrificed from selecting an alternative investment.
 Definition
Opportunity cost
Term
The Equity account that captures the owner's investment in the company.
 Definition
Paid-in-Capital
Term
A legal form of an economic entity. They pay no taxes, and each partner has unlimited liability.
 Definition
Partnership
Term
A capital budgeting tool that determines the time that an investment project will recoup its original investment.
 Definition
Payback method
Term
The numerical representation of the relationship between two numbers.
 Definition
Percent
Term
Represents the net return factor converted to a percentage. (Finish-Start/Start)
 Definition
Percentage Change
Term
A list of investments
 Definition
Portfolio
Term
The amount borrowed or invested
 Definition
Principal
Term
A guide or standard of conduct
 Definition
Principle
Term
The shares of stock are not offered to the public.
 Definition
Private Corporation
Term
Difference between revenue and expenses
 Definition
Profit
Term
A capital budgeting tool that computes the ratio of discounted cash inflow, divided by the discounted cash outflow.
 Definition
Profitability Index Method
Term
The Long-term, tangible, assets of an entity, used to generate goods or services, with an estimated useful life greater than one year.
 Definition
Property, Plant, and Equipment.
Term
The company's shares of stock are sold to the public.
 Definition
Public Corporation
Term
The answer to a division problem. For example, 10 divided by 2 = 5. Five is the ____. Ratio.
 Definition
Quotient
Term
Using various ratios to assess a company's operation.
 Definition
Ratio Analysis
Term
All assets directly used to produce goods and services. Total assets minus financial assets= ____.
 Definition
Real assets
Term
The Equity account that sumerizes Revenues(+), Expenses(-), and Dividens(-) since the entity's inception.
 Definition
Retained earnings
Term
Net Income. Also, the benefit (e.g. Interest, or the increase in value) received from an investment.
 Definition
Return
Term
Net income divided by Equity.
 Definition
Return on Equity
Term
Net income divided by Assets.
 Definition
Return on Assets
Term
The percentage of an investment that returns to the investor.
 Definition
Return Rate
Term
EARNED
 Definition
Revenue
Term
Revenue recorded when earned.
 Definition
Revenue recognition principle
Term
The probability that an investment will not be returned.
 Definition
Risk
Term
A revenue account
 Definition
Sales
Term
Created in the 1930's for the purpose of regulating the securities (stocks&Bonds) markets. They are responsible for GAAP.
 Definition
Securities and Exchange Commission (SEC)
Term
Is computed on the amount of the principal only. Simple Interest= P x R x T. P for principal, R for interest rate, and T for time.
 Definition
Simple interest
Term
One of the four GAAP required statements that reports cash in and out. It is divided into three sections; operating, investing, and financing.
 Definition
Statement of Cash Flow
Term
Balance sheet
 Definition
Statement of Financial Position.
Term
One of the four GAAP required statements that reports the change in Equty for a specified period, typically one year.
 Definition
Statement of shareholders' Equity
Term
The legal representation of corporate ownership, expressed in individual shares of stock.
 Definition
Stock
Term
One who holds corporate ownership rights.
 Definition
Stockholder
Term
Assets with physical existence. Typically property, Plant, and Equipment, Long-lived Assets, or Fixed Assets.
 Definition
Tangible Asset
Term
The number of years or fractional portion of a year that the principal is outstanding. Used in the P x R x T= Simple interest formula.
 Definition
Time
Term
An external event involving a transfer or exchange between two or more entities.
 Definition
Transaction
Term
Those costs that vary as the production/sales of units change. Usually represented as a 'per unit" cost.
 Definition
Variable cost
Term
The difference between current assets & current liabilities. The day-to-day operating capital used to meet the company's short term capital needs, or invest in money market securities.
 Definition
Working Capital
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