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| Retained Earnings + Debit = |
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| Retained Earnings + Credit = |
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| Assets, Liabilities & Stockholder's Equity at a certain date |
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| Revenues - Expenses = (Net Income / Net Loss) |
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| Retained Earnings Statement / Statement of Stockholder's Equity |
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| Beginning Retained Earnings + or - Net Income or Net Loss = End Retained Earnings |
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| Basic Accounting Equation |
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| Assets = Liabilities + Stockholder's Equity |
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| Expanded Accounting Equation |
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| Assets = Liabilities + Common Stock + Revenues + Retained Earnings - Expenses - Dividends |
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| Second and Final step in recording |
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| Date, Title of Account, Reference ID, BREIF EXPLANATION, and Db/Cr columns |
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| How Journal entries are put |
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| Chronological, double-entry. NEED BALANCING |
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| Something with like one Debit side, and 2 Credit sides (like when u pay half with cash, half w credit card) |
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| Journalize Debit or Credit side first? |
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| Master book, has all accounts for Assets, Liabilities & Stockholder's Equity (in that order) |
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| More detailed than T-account. Used in Ledgers. Has Date, Description, Ref, Debit / Credits, & BALANCE |
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| Journal --> Ledger (involves u writing on BOTH) |
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| Has the names (& REF ID's) of all accounts in the Ledger |
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| Step that balances (checks) the debits & credits of ALL ACCOUNTS for the Ledger |
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| Only used in Trial Balance & Financial Statements |
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| Negative Signs / Parenthesis |
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| Don't appear in Journals or Ledgers |
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| a Bill is Journalized as: |
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| consumables that get used up |
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| longer-term machines, etc |
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| How are Ledger accounts ordered? |
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| BY REFERENCE ID!!! (start at lowest) |
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| Journal, Ledger, Trial Balance, Adjustments, ... (add more) |
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| Identifying, Recording, Communicating |
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| Who majored in Accounting? |
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| Nike founder, Home-Depot co-founder, Head of FBI, Congressmen |
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| POPULAR Business Major that makes HELLA ca$h |
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| only ONE PART of accounting |
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| Managers, supervisors, officers etc. ACCESS TO ALL INFO |
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| Investors (owners), Creditors (loaners), Taxers, Regulators (SEC, Govt) |
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| For Internal users like Managers |
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| For SEC, banks, govt, EXTERNAL users |
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| US Generally Accepted Accounting Principles |
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| US Financial Accounting Standards Board |
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| International Accounting Standards Board |
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| International Financial Reporting Standards |
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| If its important to DECISIONS |
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| Make sure numbers are TRUTHFUL |
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| Assets are recorded at COST |
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| Reported at current VALUE |
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| Economic Entity Assumption |
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Definition
| Business is kept separate from owners |
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Definition
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Definition
| Shows input receipts and outward payments over a given period |
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| Public Accounting / Auditing |
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Definition
| CPA (Certified) examines business's financial statements for the public, or do TAXES, or CONSULTING |
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Definition
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Definition
| Rules in THE STATE WHERE IT INCORPORATED |
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| May have thousands of stockholders, shares are sold on different NATIONAL SECURITIES EXCHANGES (NYSE, etc) |
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| Only a few stockholders, doesn't sell stock to public. USUALLY SMALLER |
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Definition
| Nike (ex.) has its own name, can SUE OR BE SUED, signs contracts, pays its own taxes |
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Definition
ONLY CORPORATION's ASSETS ARE AT RISK
(Unless fraud occurs)
Not by Bankruptcy, Creditors, etc |
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Definition
| People can sell shares of CAPITAL STOCK straight to each other whenever |
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Definition
UNLIMITED SYSTEM FOR RAISING CA$H!!
JUST SELL STOCK!!! (within reason) |
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| Corporation lives on, even after ppl die |
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| Owners own it, but Board of Directors elect the leaders (CEO, Pres, CFO, etc) |
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| Overall responsibility for MANAGING the business |
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| Cheif Accounting Officer, handles all accounts |
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| Separation of Ownership & Management |
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Definition
| Makes it harder for owners to manage Co. |
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Definition
| State (taxes on shares, etc) & Federal (give financial reports to SEC, etc) |
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| Order of Corporate Control |
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Definition
| OWNERS --> Chairman & Board --> CEO & Prez --> Vice Presidents --> Treasurer & Controller |
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Definition
| Taxes on regular income & DIVIDEND INCOME |
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Definition
Document that forms organizations.
Creates many rules for organization |
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Definition
| After charter, this is made to create the Corporation's internal rules |
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| Downside of "Going Public" |
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Definition
| Gotta report to Stockholders, LOSS OF CONTROL |
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Definition
| Rights to vote on Board & actions, cash dividends, NEVER LOSE OWNERSHIP %, Reimbursement during bankruptcy |
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Definition
| Old-school document to those who buy stock. Has info & Officer's Signatures |
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Definition
Amount authorized at beginning.
Usually hold on to a portion |
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Definition
| Issuance of Dividends, TOTAL SUCCESS |
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Definition
| Stock with an IRRELEVANT set value |
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Definition
FREE to be based on its MARKET VALUE!!
(but may contain a BoD STATED value) |
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Definition
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Definition
| Just another word for stock. CAPITAL stock can be COMMON stock :) |
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| How to find Common Stock's Dividend? |
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Definition
Total Dividend -
Preferred Stock amount * value * % (and * years, if cumulative) |
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| finding Common Stock Outstanding |
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Definition
| AMOUNT ISSUED - AMOUNT IN TREASURY |
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| Total Capital received / Stock Amount |
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Definition
Get Dividends & Liquidation Assets 1st,
but do not have voting rights |
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Definition
| Gotta pay all backed up Dividends to PREFERRED Stockholders before COMMON Stockholders get ANYTHING |
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Definition
Debit "Cash Dividends" &
Credit "Dividends Payable" |
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Definition
| NOTHING. Just checking on Stockholders |
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Definition
Debit "Dividends Payable" &
Credit "Cash" |
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Definition
| Giving stock as the dividend to shareholders |
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Definition
Beginning (Revenue - Expenses)
+ / - Net Income or Loss
= Ending balance |
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Term
| Retained Earnings St8ment (w Chap 11 additions) |
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Definition
Retained Earnings,
+ / - Net Income or Loss,
MINUS - all the Dividends,
ENDING RETAINED EARNINGS |
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Term
| Authorized Stock is established in ______ |
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Definition
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| S-Ox Act requires IRS filing? |
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Definition
NO NO NO NO NO NO NO NO!!!!
S-Ox SAYS NOTHING ABOUT IRS!!!!! |
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Term
| Controls that increase Accuracy & Reliability are: |
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Definition
PHYSICAL CONTROLS???
WHATEVER!! JUST PUT IT!!! |
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Term
| Interest is with _______ recievable |
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Definition
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| Allowance for Doubtful Accounts relates to |
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Definition
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Definition
| Investing to control your competing companies |
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Definition
Debit "Debt Investments"
Credit "Cash" |
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| Entry if you sold stock for more than you bought it |
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Definition
| "Gain on Sale of Stock Investment" |
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Term
| Another name for Securities or Bonds |
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Definition
| They call them "Debt," and IDK why |
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Definition
| A Govt Bond or Security that they bought so they can "flip" it, like a house |
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Term
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Definition
| Can be stock that they bought to control another company |
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Term
| Held-for-collection Securities |
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Definition
| A bond that they own for the income, and want to hold for the whole maturing time |
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Definition
| Ready to be turned to cash soon |
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Definition
What the current value is.
This requires an adjusting entry at end of accounting periods |
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Definition
| Owns more than 50% of another company |
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Term
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Definition
Stock & Bond activities
(Dividends, issuances, etc) |
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Term
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Definition
| Operating, investing & Financing |
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Definition
| Cash events that create revenue & expenses |
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Definition
| Getting property / equipment and money made from loans |
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Term
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Definition
MAIN FOCUS OF THIS CHAPTER
Shows all the $$ transactions in a period |
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Definition
Using Stock or Bonds to buy things
Changing bonds to stock
Buying assets |
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Definition
| That business can be divided into artificial time periods |
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Definition
| When a business wants to start the year on a certain date |
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Definition
| MOST COMMON, January 1 - December 31 |
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Term
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Definition
Recording UPON BILLING / AGREEMENT
(GAAP USES THIS!!) |
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Term
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Definition
Recording WHEN CASH IS RECEIVED
(not common or standard) |
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Term
| Revenue Recognition Principle |
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Definition
| Companies record revenue when they fulfill the service |
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Term
| Expense Recognition Principle |
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Definition
| Used with or "Matches" Revenue Recognition Principle to show expenses = results |
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Term
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Definition
| Prepaid Expenses & Unearned Revenues |
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Term
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Definition
Accured Revenues, Accured Expenses
(no cash yet) |
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Term
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Definition
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Term
| How to account for Depreciation? |
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Definition
| Add AND DEBIT an account for "Accumulated Depreciation" |
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Term
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Definition
| The ADJUSTED value for Equipment (etc) COMBINED with its DEPRECIATION ACCOUNTS |
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Term
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Definition
| Cash u got IN ADVANCE for future work |
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Term
| Unearned Revenues + Credit = |
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Definition
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Term
| Unearned Revenues + Debit = |
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Definition
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Term
| How does Unearned Revenue fit into Ledger? |
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Definition
| It has its own account AND IS PART OF SERVICE REVENUE!! |
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Term
| Equipment Depreciation Expense is called |
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Definition
| JUST: "Depreciation Expense" |
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Term
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Definition
| Credit you earn for doing work (NOT PAID YET) |
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Term
| Accrued Revenues + Credit = |
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Definition
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Term
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Definition
| Expenses you didn't record or pay yet |
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Term
| Accrued Expenses + Debit = |
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Definition
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Term
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Definition
| Interest CREDITS you earn, but didn't cash in yet |
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Term
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Definition
| Snapshot of Ledger's A = L + E, INCLUDING ALL ADJUSTMENTS |
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Term
| WHERE DO EXPENSES & REVENUES GO????? |
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Definition
IN STOCKHOLDER'S EQUITY!!!!
A = L + EEEEE!! <-- THIS SIDE |
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Term
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Definition
| ONLY CA$H AND VALUE THINGS ARE IN FINANCIAL REPORTS!! Not employee ethnicity, ratings, etc |
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Term
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Definition
| Assumes that the business will continue for some time, not die tomorrow |
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Term
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Definition
| Transactions are accounted for WHEN THEY OCCUR |
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Term
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Definition
| WHAT IS WIDELY ACCEPTED UNDER GAAP!!! |
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Term
| Expense Recognition Principle |
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Definition
| Expenses are met with Revenues on sheets |
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Term
| REVENUE RECOGNITION PRINCIPLE |
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Definition
| YOU WRITE DOWN REVENUE WHEN YOU EARN IT!! |
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Term
| Full Disclosure Principle |
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Definition
| That the company MUST SHOW ALL FINANCIAL INFORMATION to the right people |
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Term
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Definition
| Things are recorded at their cost. GAAP |
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Term
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Definition
| Things are recorded at their current value |
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Term
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Definition
Big optional thing for END OF ACC CYCLE
Has Trial balances, Adjustments, Inc St8ment, & final Balance Sheet |
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Term
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Definition
Dividends, Expenses, etc.
THINGS THAT GET CLOSED AT END OF ACC PERIOD |
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Term
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Definition
Assets, Liabilities, S Equity
THESE STAY FLUID FOREVER!!!
NEVER EVER GET CLOSED!!! |
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Term
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Definition
| Add in the Net Income / Loss into the Retained Earnings Statement |
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Term
| Post-Closing Trial Balance |
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Definition
| Takes CLOSED PERMANENT accounts from Ledger and balances them |
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Term
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Definition
| Total opposite of a wrong entry |
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Term
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Definition
DOESNT MEAN "SECRET"
Means a few accounts grouped by "CLASS" |
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Term
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Definition
| What a company expects to cash-in on or use SOON |
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Term
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Definition
| Time it takes to purchase inputs, convert it & sell it for cash to clients |
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Term
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Definition
| Stocks & bonds, Land & Buildings, or anything it's gonna hold onto for a while |
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Term
| Property, Plant & Equipment |
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Definition
| Long-Term machines etc that ITS USING NOW |
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Term
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Definition
| Checks & Balances, and using multiple people to check each other |
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Term
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Definition
| Explains & FIXES differences between Bank & Company's balances |
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Term
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Definition
| What I use at Wells Fargo, has space on front for amount & back for checks |
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Term
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Definition
| The dude writing the check |
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Term
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Definition
| The bank, who pays the check like the "Maker" tells it to |
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Term
| Bank Account = Normal ______ Balance |
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Definition
CREDIT BALANCE!!!
The bank adds your deposits by CREDITING it, since its a liability to pay you back later |
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Term
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Definition
| Shows the customer's balance and transactions |
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Term
Bank Service Charge
-- Journalized as: |
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Definition
"Miscellaneous Expense"
(normal DEBIT balance) |
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Term
NSF Check
-- Journalized as: |
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Definition
"Non-Sufficient Funds" Check
ACCOUNTS RECEIVABLE |
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Term
Bank Error
-- Journalized as: |
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Definition
Gotta use a correcting entry & call it:
ACCOUNTS PAYABLE / RECEIVABLE |
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Term
| How to do Bank Reconciliation??? |
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Definition
Do "Cash Balance per Bank,"
Add in all adjusting entries 4 it & balance it, then DO THE SAME FOR "BOOKS" |
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Term
| Entries for Reconciliation of BANK BALANCE |
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Definition
ADD - Deposits in Transit,
LESS - Outstanding Checks, |
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Term
| Entries for Reconciliation of BOOK BALANCE |
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Definition
ADD - Collections of notes, Errors
LESS - NSF Checks, Bank CHARGES (service, printing etc), |
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Term
| RUN THROUGH AND WRITE UP LITTLE FAKE BANK RECONCILIATION FORMS WITH THE CORRECT THINGS ON EACH SIDE FOR PRACTICE!!! |
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Definition
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Term
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Definition
| Dishonest act that benefits the employee at cost of employer |
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Term
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Definition
| Financial Pressure, Opportunity, Rationalization |
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Term
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Definition
| Methods by which an organization safeguards its assets |
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Term
| Establishment of Responsibility |
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Definition
| EASIER TO CONTROL IF ONE PERSON CAN BE SPECIFICALLY RESPONSIBLE FOR A TASK |
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Term
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Definition
| Smart documentation systems, with numbering and someone accounting for them |
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Term
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Definition
| Safe boxes, doors, Cameras, Time clocks, Computer passwords |
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Term
| Independent Internal Verification |
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Definition
| Checks & Balances, where employees check each other to make sure nobody steals |
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Term
| What is the asset most vulnerable to theft? |
|
Definition
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Term
| Which types of companies are most vulnerable to fraud / theft? |
|
Definition
|
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Term
|
Definition
| Little temporary fund where money is put aside into, and used (UNRECORDED) whenever |
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Term
|
Definition
| Bond employees? Make people take vacations for health, Do background chex |
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Term
!!!!HOW TO RECONCILE A BANK ACCOUNT!!!!!
(exercise on pg 353) |
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Definition
You have to make the Balance per Bank & Balance per Books into their TRUE (Adjusted) Cash Balances.
Balance per Bank Steps:
1. Add Deposits in Transit, and
2. DEDUCT Outstanding Checks (ones the guy is tryina pay out but didn't get deducted from his acc yet)
Balance per Books Steps:
1. ADD OR DEDUCT any errors, and
2. ADD OR DEDUCT any service charges or happy interest earned |
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Term
| How to get values of anything here? |
|
Definition
| Add / Subtract all expenses that go into getting it |
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Term
|
Definition
| All costs are added into the value recorded |
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Term
|
Definition
Just COST - SALVAGE $$ SOLD FOR
pg 431 |
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Term
|
Definition
(Cost - Salvage Value)
DIVIDED BY
Usable Life (usually years) |
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Term
|
Definition
(Cost - Salvage Value)
DIVIDED BY
Amount of units of use |
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Term
|
Definition
| Everything they paid to make it ready, like realtor fees, demolition, etc |
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Term
| Retiring Equipment is Journalized as |
|
Definition
Accumulated Depreciation -- Equip
Credit Equipment |
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Term
|
Definition
| Used for Pantents, Goodwill, Government Grants or any other intangible asset |
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Term
|
Definition
| Cost paid - (assets - liabilities) |
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Term
| How is Goodwill entried as? |
|
Definition
Debit to Goodwill
Credit to Cash |
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Term
|
Definition
Things like Patents, Franchises, Goodwill, etc
And the first 2 AMORTIZE (lose value) over specific amounts of time |
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Term
|
Definition
| A SYSTEM OF INTERNAL CONTROL!!! |
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|
Term
| Organizations use internal control to |
|
Definition
|
|
Term
|
Definition
| F.O.R. - Financial Pressure, Opportunity, Rationalization |
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|
Term
Petty cash is replenished with it has $5 in cash & reciepts of $192.
The replenishing entry would... |
|
Definition
| Debit "Cash Over & Short for $3" |
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Term
| The account "Retained Earnings" is |
|
Definition
| NET INCOME RETAINED IN THE COMPANY!!! |
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Term
| Investors record Dividends Recieved by crediting |
|
Definition
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|
