ACC 212
Terms
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- The process of identifying, measuring, and communicating econominc information to various users.
- Accounting
- The branch of accounting concerned with providing management with information to facilitate planning and control.
- Management Accounting
- The branch of accounting concerned with the preparation of financial statements for outsiders.
- Financial Accounting
- The owners' claim on the assets of an entity.
- Owners' Equity
- The owners' equity in a corporation.
- Stockolder's Equity
- The part of owners' equity that represents the income earned less dividends paid over the life of an entity.
- Retained Earnings
- The financial statement that summarizes the assets, liabilities, and owners' equity at a specific point in time.
- Balance Sheet
- A statement that summarizes revenues and expenses.
- Income Statement
- A distribution of the net income of a business to its owners.
- Dividends
- The statement that summarizes the income earned and dividends paid over the life of a business.
- Statement of Retained Earnings
- Assets are recorded at the cost to acquire them.
- Cost Principle
- The assumption that an entity is not in the process of liquidation and that it will continue indefinetly.
- Going Concern
- The yardstick used to measure amounts in financial statements; the dollar in the US.
- Monetary Unit
- Artificial segment on the calender used as the basis for preparing financial statements.
- Time Period
- The various methods, rules, practices, and othe rprocedures that have evolved over time in response to the need to regulate the preparation of financial statements.
- Generally Accepted Accounting Principles (GAAP)
- The federal agency with ultimate authority to determine the rules in preparing financial statements for companies whose stock is sold to the public.
- Securities and Exchange Commission (SEC)
- The group in the privatesector with authority to set accounting standards.
- Financial Accounting Standards Board (FASB)
- The professional organization for certified public accountants.
- American Institute of Certified Public Accountants (AICPA)
- The quality of accounting information that makes it comprehensible to those willing to spend the necessary time.
- Understandability
- Th capacity of information to make a difference in a decision.
- Relevance
- The quality that makes accounting information dependable in representing the events that it purports to represent.
- Reliability
- For accounting information, the quality that allows a user to analyze two or more companies and look for similarities and differences.
- Comparability
- The process of allocating the cost of a long-term tangible asset over its useful life.
- Depreciation
- For accounting information. the quality that allowes a user to compare two or more accounting periods for a single company.
- Consistency
- The magnitude of an accounting information omission or misstatement that will affect the judgement of someone relying on the information.
- Materiality
- The practice of using the least optimistic estimate when two estimates of amounts are about equally likely.
- Conservatism
- The period of time between the purchase of inventory and the collection of any receivable from the sale of inventory.
- Operating Cycle
- An asset that is expected to be realized in cash or sold or consumed during the operating cycle or within one year if the cycle is less than one year.
- Current Asset
- An obligation that will be satisfied withing the next operating cylce or within one year if the cycle is shorter than one year.
- Current Liability
- The nearness to cash of the assets and liabilities.
- Liquidity
- Current assests minus current liabilities.
- Working Capital
- Current assets divided by current liabilities.
- Current Ratio
- An income statement in which all expenses are added together and subtracted from all revenues.
- Single-Step Income Statement
- An income statement that shows classifications of revenues and expenses as well as important subtotals.
- Mutiple-Step Income Statement
- Sales less cost of goods sold.
- Gross Profit
- Gross profit to net sales.
- Gross Profit Ratio
- Net Income divided by net sales
- Profit Margin
- A happening of consequence to an entity.
- Event
- An event involving interaction between an entity and its environment.
- External Event
- An event occurring entirely within an entity
- Internal Event
- Any event that is recognized in a set of financial statements.
- Transaction
- A piece of paper that is used as evidence to record a transaction.
- Source Doucument
- Record used to accumulate amounts for each individual asset, liability, revenue, expense, and component of owners equity.
- Account
- A numerical list of all the accounts used by a company.
- Chart of Accounts
- A book, file, hard drive, or other device containing all the accounts.
- General Ledger
- An entry to the right side of an account.
- Credit
- An entry on the left side of an account.
- Debit
- A system of accounting in which every transaction is recorded with equal debits and credits and the accounting equation is kept in balance.
- Double-entry System
- The process of transferring amounts from a journal to the ledger accounts.
- Posting
- The act of recording journal entries.
- Journalizing
- The journal used in place of a specialized journal.
- General Journal
- A list of each account and its balance; used to prove equality of debits and credits.
- Trial Balance