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CPS - Management
CHAPTER 6-ACCOUNTING PRINCIPLES - PART 1
40
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Not Applicable
08/14/2005

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Term
ACCOUNT
Definition
DEVICE USED TO COLLECT AND SUMMARIZE INFORMATION
Term
ACCOUNTING
Definition
PROCESS OF RECORDING, MEASURING, SUMMARIZING, ANALYZING AND INTERPRETING FINANCIAL INFONRMAITON FOR DECISION-MAKING PURPOSES.
Term
ACCOUNTING ENTITY
Definition
ANY BUSINESS, INDIVIDUAL OR NOT-FOR-PROFIT ORGANIZATION WHOSE FINANCIAL AFFAIRS CAN BE VIEWED AS DISTINCT FROM ANY OTHER ENTITY.
Term
ACCOUNTING EQUATION
Definition
ASSETS = LIABILITIES + OWNERS EQUITY
Term
ACCRUAL
Definition
REVENUES SHOULD BE REPORTED WHEN EARNED RATHER THAN WHEN CASH IS RECEIVED; EXPENSES SHOULD BE REPORTED SHEN INCURRED RATHER THAN WHEN PAID.
Term
AUDIT
Definition
CPA REVIEWS COMPANY'S FINANCIAL STATEMENTS TO DETERMINE THEIR CONFORMITY WITH GENERALL ACCEPTED ACCOUONTING PRINCIPLES.
Term
CONSERVATISM
Definition
WHEN DOUBT EXISTS AB OUT VALUATION OF AN ASSET, CHOOSE METHOD LEAST LIKELY TO OVERSTATE INCOME OR UNDERSTATE LIABILITY.
Term
CONSISTENCY
Definition
ONCE CHOSEN, USE SAME ACCOUNTING METHOD FROM ONE PERIOD TO ANOTHER.
Term
CORPORATION
Definition
SEPARATE LEGAL ENTITY CREATED BY STATE OR FEDERAL LAWS HAVING SAME LEGAL RIGHTS & O BLIGATIONS AS INDIVIDUALS.
Term
CREDIT
Definition
RECORDED ON RIGHT SIDE OF A T-ACCOUNT.
Term
DEBIT
Definition
ENTRY RECORDED ON LEFT SIDE OF A T-ACCOUNT.
Term
DOUBLE-ENTRY ACCOUNTING
Definition
RECORDING OF AN EQUAL AMOUNT OF DEBITS AND CREDITS.
Term
ESTIMATION
Definition
DIVISION OF THE LIFE OF AN ENTITY INTO ARBITRARY PERIODIC TIME INTERVALS.
Term
ESPENSES
Definition
COSTS OF GOODS AND SERVICES CONSOUMED BY THE ENTITYAS A RESULT OF EAARNING REVENUE.
Term
EXTERNAL USERS
Definition
A NUMBER OF USERS OF ACCOUNTING DATA THAT ARE EXTERNAL TO THE COMPANY'S MANAGEMENT.
Term
FINANCIAL STATEMENTS
Definition
STANDARD GEBERAL-PURPOSE REPORTS INCLUDING BALANCE SHEET, THE INCOME STATEMENT AND THE CASH FLOW STATEMENT.
Term
FISCAL YEAR
Definition
AN ACCOUNTING PERIOD CONSISTING OF 12 MONTHS.
Term
FULL DISCLOSURE
Definition
ALL RELEVANT INFORMATION TO DECISION MAKERS BE COMMUNITACED TO THEM THROUGH THE FINANCIAL STATEMENTS.
Term
GENERALLT ACCEPTED ACCOUNTING PRINCIPLES (GAAP)
Definition
RULES GOVERNING FORMAT OF FINANCIAL STATEMENTS AND METHODS OF RECORDING DATA SUMMARIZED WITHIN THEM.
Term
GOING CONCERN
Definition
ACCOUNTANT ASSUMES THAT THE ENTITY IS GOING TO EXIST FOR AN INDEFINITE PERIOD OF TIME.
Term
HISTORICAL COST
Definition
ORIGINAL PURCHASE COST USED TO VALUE ASSETS FOR FINANCIAL STATEMENT PURPOSES.
Term
INTERNAL USERS
Definition
MANAGERS WHO USE FINANCIAL DATA WITHIN THE BUSINESS.
Term
JOURNAL
Definition
BOOKS OF ORIGINAL ENTRY OF ACCOUNTING TRANSACTIONS.
Term
LEDGER
Definition
RECORD OF ALL ACCOUNTS MAINTAINED BY AN ENTITY.
Term
LIABILITY
Definition
OBLIGATIONS OR DEBTS OF AN ENTITY OWED TO OTHER PARTIES.
Term
MATCHING
Definition
EXPENSES INCURRED IN EARNING REVENUES SHOULD BE MATCHED WITH THOSE REVENUES TO DETERMINE NET INCOME.
Term
MATERIALITY
Definition
RELATIVE IMPORTANCE OF AN ITEM OR EVENT TO THE DECISIONS THAT USEERS WILL BE MAKING.
Term
MONEY MEASUREMENT
Definition
COMMON UNIT OF MEASURE USED FOR RECORDING ECONOMIC EVENTS.
Term
OWNER'S EQUITY
Definition
REPRESENTS RESOURCES INVESTED IN THE BUSINESS BY THE OWONERS (STOCKHOLDERS).
Term
PARTNERSHIP
Definition
BUSINES WITH 2 OR MORE OWNERS WHO AGREED TO OPERATE AS CO-OWNERS; WHO SHARE THE PROFITS AND LOSSES OF THE BUSINESS IN AN AGREED-ON PROPORTION.
Term
PERIODICITY
Definition
LIFE OF ENTITY DIVIDED INTO TIME INTERVALS FOR REPORTING PURPOSES.
Term
POSTING
Definition
DEBITS AND CREDITS RECORDED IN THE JOURNAL ENTRIES ARE POSTED TO THE APPROPRIATE LEDGER ACCOUNTS.
Term
RELEVANCE
Definition
ACCOUNTING INFORMATION MUST MAKE A DIFFERENCE IN THE SPECIFIC DECISIONS THAT ARE TO BE MADE FROM THE INFORMATION.
Term
REVENUE
Definition
EARNINGS RESULTING FROM THE RECEIPT OF CASH OR OTHER ASSETS IN EXCHANGE FOR GOODS SP;D OR SERVICES PERFORMED BY AN ENTITY.
Term
SHAREHOLDERS (STOCKHOLDERS)
Definition
OWNERS OF THE CAPITAL STOCKOF THE COMPANY AND OWNERS OF THE CORPORATION.
Term
SOLE PROPRIETORSHIP
Definition
BUSINESS OWNED BY ONE INDIVIDUAL.
Term
STABLE DOLLAR CONCEPT
Definition
CONCEPT THAT ASSUMES THAT A DOLLAR TODAY IW WORTH THE SAME AMOUNT AS A DOLLAR USED TO BY AN ASSET IN THE PAST.
Term
STABLE DOLLAR CONCEPT
Definition
CONCEPT THAT ASSUMES THAT A DOLLAR TODAY IW WORTH THE SAME AMOUNT AS A DOLLAR USED TO BY AN ASSET IN THE PAST.
Term
STOCKHOLDERS EQUITY
Definition
REPRESENTS THE RESOURCES INVESTED IN THE BUSINESS BY THE OWNERS.
Term
TRIAL BALANCE
Definition
LISTING OF ALL LEDGER ACCOUNT BALANCES; SUMMARIZING ALL LEDGER ACCOUNTS.
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