Terms in this set (70)
Additional paid in capital
A value that is often included in the contributed surplus account in the shareholders' equity section of a company's balance sheet.
Adjusting Journal Entries
a journal entry prepared to adjust account balances. The only way of changing account balances is to entrer journal entries. Account balances cannot be changed without journal entries.
anything that has future economic value
A financial statement that summarizes a company's assets, liabilities and shareholders' equity at a specific point in time.
The amount by which the market price of a bond is lower than its principal amount due at maturity.
A bond that is trading above its par value. A bond will trade at a premium when it offers a coupon rate that is higher than prevailing interest rates. This is because investors want a higher yield, and will pay more for it.
the net amount of a plant asset
The one-year period that begins on January 1 and ends on December 31, based on the commonly used Gregorian calendar.
the combination of a corporation's common stock and preferred stock (if any).
A branch of accounting that requires a high degree of verification before making a legal claim to any profit. will recognize all probable losses as they are discovered and most expenditures as they are incurred. Revenue will be deferred until it is verified.
once you adopt an accounting principle or method, continue to follow it consistently in future accounting periods.
taxes against profits earned by businesses during a given taxable period
Cost of Goods Sold
the cost of the merchandise that was sold to customers. The cost of goods sold is reported on the income statement when the sales revenues of the goods sold are reported.
an accountant who has passed certain examinations and met all other statutory and licensing requirements of a United States state to be certified by that state; "in addition to accounting and auditing.
Cash and other resources that are expected to turn to cash or to be used up within one year of the balance sheet date.
=current assets/current liabilities
to enter an amount on the left side of the account
total assets / total liabilities
an adjustment for received cash in advance, also deferral adjustments for liabilities
allocated the cost of a plant asset to expense over the assets useful life
A distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders.
Earnings Per Share
(net income-dividends on preferred stock) / average outstanding shares
you gain ownership
cost of operating a business
a period used for calculating annual ("yearly") financial statements in businesses and other organizations.
a term used in accounting for assets and property that cannot easily be converted into cash
A company's total sales revenue minus its cost of goods sold, divided by the total sales revenue, expressed as a percentage
A (company's revenue - its cost of goods sold). a company's residual profit after selling a product or service and deducting the cost associated with its production and sale.
statement that measures a company's financial performance over a specific accounting period. Financial performance is assessed by giving a summary of how the business incurs its revenues and expenses through both operating and non-operating activities. It also shows the net profit or loss incurred over a specific accounting period, typically over a fiscal quarter or year.
An employee of a company charged with providing independent and objective evaluations of the company's financial and operational business activities, including its corporate governance. They also provide evaluations of operational efficiencies and will usually report to the highest levels of management on how to improve the overall structure and practices of the company.
Inventory Turnover Ratio
A ratio showing how many times a company's inventory is sold and replaced over a period. (sales/inventory)
the action or process of investing money for profit or material result.
a chronological record of transactions
the grouping of all the T-accounts, with their balances
Long Term Liabilities
a section of the balance sheet that lists obligations of the company that become due more than one year into the future.
any business that uses components, parts or raw materials to make a finished good.
The current price at which an asset or service can be bought or sold
A commercial enterprise dedicated to the purchase of finished goods and their resale for a profit.
The amount of principal due on a formal written promise to pay. Loans from banks are included in this account.
a day-to-day expense incurred in the normal course of business.
A legal form of business operation between two or more individuals who share management and profits
Accounts that do not close at the end of the accounting year
A method of accounting for inventory that records the sale or purchase of inventory in near real-time, through the use of computerized point-of-sale and enterprise asset management systems
entering a transaction in the journal
A class of ownership in a corporation that has a higher claim on the assets and earnings than common stock.
Recording Bonds Issued
the accounting entry will include a debit to Cash for the amount of cash received, and a credit to Bonds Payable for the face or maturity amount.
increase in retained earnings from delivering goods or services to customers or clients
the basis for recording revenues, tells accountants when to record revenue and the amount of revenue to record
Statement of Cash Flows
a cash basis report on three types of financial activities: operating activities, investing activities, and financing activities.
Statement of Retained Earnings
The amount of net income which is left in a business after the distribution dividends or withdrawls by owner is called retained earnings. It is calculated as shown in the following formula:
= Beginning Retained Earnings
+ Net Income
− Withdrawals by Owners
shows detail for part of the accounting records such as property and equipment, prepaid expenses, etc.
left side, debit (received) right side, credit (gave)
Times Interest Earned Ratio
a measure of a company's ability to honor its debt payments.
lists accounts with their balances, 1. assets 2. liabilities 3. stockholders equity
When an individual or company receives money for a service or product that has yet to be fulfilled.
the proportional analysis of a financial statement, where each line item on a financial statement is listed as a percentage of another item.
the cost that a business expects to or has already incurred for the repair or replacement of goods that it has sold.
A liability account that reports the estimated amount that a company will have to spend to repair or replace a product during its warranty period
Working Capital Ratio
(Current Assets/Current Liabilities) indicates whether a company has enough short term assets to cover its short term debt.
The portion of shares that a company keeps in their own treasury.
the comparison of historical financial information over a series of reporting periods, or of the ratios derived from this financial information.
A company's debts or obligations that are due within one year.Appears on the company's balance sheet and include short term debt, accounts payable, accrued liabilities and other debts.
to enter an amount on the right side of an account.
A certified public accountant who examines the financial records and business transactions of a company that he/she is not affiliated with
A method of inventory valuation for financial reporting purposes where a physical count of the inventory is performed at specific intervals.
a general ledger account that begins each accounting year with a zero balance.
a form of long term debt
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