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43 terms

intro business ch. 17

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accounting
the recording, classifying, summarizing, and interpreting of fincancial events and transactions to provide management and other interested parties the information they need to make good decisions
managerial accounting
accouinting used to provide information and analyses to managers within the organization to assist them in decision making
certified management accountant (CMA)
a professional accountant who has met certain educational and experience requirments, passed a qualifying exam in the field, and been certified by the institute of certified managemtn accountants
financial accounting
accounting information and analyses prepared for people outside the organization
annual report
a yearly statement of the financial condition, progress, and expectations of an organization
private accountant
an accountant who works for a single firm, government agency, or nonprofit organization
public accountant
an accountant who provides accounting services to individuals or business on a fee basis
certified public accountant (CPA)
an accountant who passes a series of examinations established by the amercian institute of certifed public accountants
auditing
the job of reviewing and evaluating the records used to prepare a companys financial statements
certified internal auditor (CIA)
an accountant who has a bachelors degree and two years experience in internal auditing, and who has passed an exam administered by the institue of internal auditors
independent audit
an evaluation and unbiased opinion about the accuracy of a companys financial statemtns
tax accountant
an accountant trained in tax law and responsible for preparing tax returns or developing tax strategies
government and not for profit accounting
accounting system for organizations whose purpose is not generating a profit, but serving ratepayers, taxpayers, and others according to a duly approved budget
accounting cycle
a six step procedure that results in the preparation and analysis of the major financial statements
bookkeeping
the recording of business transactions
journal
the record book or computer program where accounting data are first entered
double entry bookkeeping
the concept of writing every business transaction in two places
ledger
a specialized accounting book or computer program in which information from accounting journals is accumulated into specific categories and posted so that managers can find all the information about one account in the same place
trial balance
a summary of all the data in the account ledgers to show whether the figures are correct and balanced
financial statemtent
a summary of all the transactions that have occurred over a particular period
fundamental accounting equation
assets = liabilities + owners equity; this is the basis for the balance sheet
balance sheet
the financial statement that reports a firms financial condidtion at a specific time
assets
economic resources (things of value) owned by a firm
liquidity
how fast an asset can be converted into cash
current assets
items than can or will be converted into cash within one year
fixed assets
assets that are relatively permanent, such as land, buildings, and equipment
intangible assets
long-term assets (e.g., patents, trademarks, copyrights) that have no real physical form but do have value
liabilities
what the business owes to others (debts)
accounts payable
current liabilities involving money owed to others for merchandise or services purchased on credit but not yet paid for
notes payable
short-term or long-term liabilites that a business promises to repay by a certain date
bonds payable
long term liabiites that represnt money lent to the firm that must be paid back
owners equity
the amount of the business that belongs to the owners minus any liabilities owed by the business
retained earnings
the accumulated earnings from a firms profitable operations that wer kept in the business and not paid out to stockholders in dividends
income statement
the financial statement that shows a firm's profit after costs, expenses, and taxes; it summarizes all of the resources that have come into the firm (revenue), all the resources tht have left the firm, and the resulting net income
net income or net loss
revenue left over after all costs and expenses, including taxes, are paid
revenue
the value of what is received for goods sold, services rendered, and other financial sources
cost of goods sold (or cost of goods manufactured)
a measure of the cost of merchandise sold or cost of raw materials and supplies used for producing items for resale
gross profit (gross margin)
how much a firm earned by buying (or making) and selling merchandise
operating expenses
costs involved in operating a business, such as rent, utilites and salaries
depreciation
the systematic write-off of the cost of a tangible asset over its estimated useful life
statement of cash flows
financial statement that reports cash receipts and disbursements related to a firms three major activites: 1. operations, 2. investments, 3. financing
cash flow
the difference between cash coming in and cash going out of a business
ratio analysis
the assessment of a firms fincanical condidtion and performance through calcualtions and interpretations of financial ratios developed from the firms financial statments