Term
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Definition
| The recording, classifying, summarizing, and interpreting of financial events and transactions to provide management and other interested parties the information they need to make good decisions. |
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| Accounting used to provide information and analysis to managers inside the organization to assist them in decision making. |
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| Certified Management Accountant (CMA) |
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Definition
| A professional accountant who has met certain educational and experience requirements, passed a qualifying exam, and been certified by the Institute of Certified Management Accounts. |
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Definition
| Accounting information and analysis prepared for people outside the organization. |
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| A yearly statement of the financial condition, progress, and expectations of an organization. |
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| An accountant who works for a single firm, government agency, or nonprofit organization. |
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| An accountant who provides accounting services to individuals or businesses on a fee basis. |
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| Certified Public Accountant (CPA) |
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Definition
| An accountant who passes a series of examinations established by the American Institute or Certified Public Accountants (AICPA) |
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Term
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Definition
| The job of reviewing and evaluating the information used to prepare a company's financial statements. |
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Definition
| An evaluation and unbiased opinion about the accuracy of a company's financial statements. |
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| Certified Internal Auditor (CIA) |
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Definition
| An accountant who has a bachelor's degree and two years of experience in internal auditing, and who has passed an exam administered by the Institute of Internal Auditors. |
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Definition
| An accountant trained in tax law and responsible for preparing tax returns or developing tax strategies. |
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| Government and Not-for-Profit Accounting |
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Definition
| Accounting system for organizations whose purpose is not generating a profit but serving ratepayers, taxpayers, and others according to a duly approved budget. |
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Definition
| A six-step procedure that results in the preparation and analysis of the major financial statements. |
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Definition
| The recording of business transactions. |
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Definition
| The record book or computer program where accounting data are first entered. |
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Term
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Definition
| The practice of writing every business transaction in two places |
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Term
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Definition
| 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. |
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Definition
| A summary of all the financial data in the account ledgers that ensures the figures are correct and balanced. |
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Definition
| A summary of all the transactions that have occurred over a particular period. |
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| Fundamental Accounting Equation |
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Definition
| Assets = Liabilities + Owners equity. this is the basis for the balance sheet. |
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Term
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Definition
| Financial statement that reports a firm's financial condition at a specific time and is composed of three major accounts: assets, liabilities, and owners equity |
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Term
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Definition
| Economic resources (things of value) owned by a firm. |
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| The ease with which an asset can be converted into cash. |
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| What the business owes to others (debts) |
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Term
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Definition
| Current liabilities are bills the company owes to others for merchandise or services purchased on credit but not yet paid for. |
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Term
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Definition
| Short-term or long-term liabilities that a business promises to repay by a certain date. |
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Term
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| Long-term liabilities that represent money lent to the firm that must be paid back. |
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| The amount of the business that belongs to the owners minus any liabilities owed by the business. |
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Definition
| The accumulated earnings from a firm's profitable operations that were reinvested in the business and not paid out to stockholders dividends. |
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Definition
| 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 that have left the firm, and the resulting net income. |
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Definition
| Revenue left over after all costs and expenses, including taxes, are paid |
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| Costs of Goods Sold (or cost of goods manufactured) |
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Definition
| A measure of the cost of merchandise sold or cost of raw materials and supplies used for producing items for resale. |
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| Gross Profit (or gross margin) |
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Definition
| How much a firm earned by buying (or making) and selling merchandise. |
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Definition
| Costs involved in operating a business, such as rent, utilities, and salaries. |
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Term
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Definition
| The systematic write-off of the cost of a tangible asset over its estimated useful life. |
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| The Statement of Cash Flows |
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Definition
| Financial Statement that reports cash receipts and disbursements related to a firm's three major activities: operations, investments, and financing. |
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Definition
| The difference between cash coming in and cash going out of a business |
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Definition
| The assessment of a firm's financial condition using calculations and interpretations of financial ratios developed from the firm's financial statements. |
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Definition
| A firm's current assets to its current liabilities. |
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| Acid-Test (or Quick Ratio) |
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Definition
| Measures the cash, marketable securities (such as stocks and bonds), and receivables of a firm, compared to its current liabilities. |
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Term
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Definition
| Measures the degree to which a firm relies on borrowed funds in its operations. |
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Term
| Debt to Owners' Equity Ratio |
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Definition
| Measures the degree to which the company is financed by borrowed funds that it must repay. |
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| Profitability (Performance) Ratios |
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Definition
| Measures how effectively a firm's managers are using its various resources to achieve profits. |
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Definition
| Tells us how effectively management is turning over inventory. |
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Definition
| Measures the speed with which inventory moves through the firm and gets converted into sales. |
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Term
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Definition
| Measures a company's ability to turn assets into cash to pay its short-term debts. |
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Term
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Definition
| The function in a business that acquires funds for the firm and manages those funds within the firm. |
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Definition
| The job of managing a firm's resources so it can meet goals and objectives. |
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Term
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Definition
| Managers who examine financial data prepared by accountants and recommend strategies for improving the financial performance of the firm. |
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Term
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Definition
| Forecast that predicts revenues, costs, and expenses for a period of one year or less. |
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Term
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Definition
| Forecast that predicts the cash inflows and outflows in future periods, usually months or quarters. |
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Term
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Definition
| Forecast that predicts revenues, costs, and expenses for a period longer than 1 year, and sometimes as far as 5 or 10 years into the future. |
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Definition
| A financial plan that sets forth management's expectations, and, on the basis of those expectations, allocates the use of specific resources throughout the firm. |
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Definition
| A budget that highlights a firm's spending plans for major asset purchases that often require large sums of money. |
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Definition
| A budget that estimates cash inflows and outflows during a particular period like a month or a quarter. |
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| Operating (or Master) Budget |
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Definition
| The budget that ties together the firm's other budgets and summarizes its proposed financial activities. |
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Term
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Definition
| A process in which a firm periodically compares its actual revenue, costs, and expenses, with its budget. |
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