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Details Title: Test 1 Description: Ch. 1-5 Total Flash Cards: 110 Created: 02/09/2005 16:19:48	To study from this set of flash cards, or to create your own your own study flash cards, register HERE. If you are already a registered user, CLICK HERE.
Cards Term Accounting Definition An information system for the measurement and reporting of the transformation of resources into goods and services and the sale or transfer of these goods and services to customers Term Audit Definition A detailed, systematic investigation of a company's accounting records and procedures of the purpose of determining the reliability of financial reports Term Business Organization Definition Organizations that sell their goods and services to make a profit Term Contracts Definition Legal agreements for the exchange of resources and services Term Corporation Definition A legal entity with the right to enter into contracts; the right to own,buy, and sell property; and the right to sell stock Term Creditor Definition A person or organization who loans financial resources to an organization Term Effective Business Definition An organization that is successful in providing goods and services demanded by customers Term Efficient Business Definition An organization that keeps the costs of resources consumed in providing goods and services low relative to the selling prices of these goods and services Term Financial Accounting Definition The process of preparing, reporting, and interpreting accounting information that is provided to external decison makers Term Generally Accepted Accounting Principles Definition Standards developed by professional accounting organizations to identify appropriate procedures Term Governmental and nonprofit organizations Definition Organizations that provide goods or, more typically, services without the intent of making a profit Term Information Definition Facts, ideas, and concepts that help us understand the world Term Management accounting Definition The process of preparing, reporting, and interpreting information for use by an organizations' internal decision makers Term Manufacturing companies Definition Organizations that produce goods that they sell to consumers, to merchandising companies, or to other manufacturing companies Term Market Definition Any location or process that permits resources to be bought and solt Term Merchandising companies Definition Organizations that sell to consumers goods that are produced by other companies Term Moral hazard Definition The condition that exists when agents have superior information to principals and are able to make decisions that favor their own interest over those of the principals Term Mutual Agency Definition A legal right that permits a partner to enter into contracts and agreements that are binding on all members of a partnership Term Organization Definition A group of people who work together to develop,produce, and/or distribute goods or services Term Partnership Definition A business owned by two or more persons, with no legal identity distinct from that of the owners Term Profit Definition The difference between the price a seller receives for goods or services and the total cost to the seller of all resources consumed in developing, producing, and selling those goods or services during a particular period Term Proprietorship Definition A business owned by one person, with no legal identity distinct from that of the owner Term Retail companies Definition same as merchandising companies Term Return on Investment Definition the amount of profits earned by a business that could be paid to owners Term Risk Definition Uncertainty about an outcome Term Service companies Definition organizations that sell services rather than goods Term Shareholders Definition same as stockholders Term stakeholders Definition those who have an economic interest in an organization and those who are affected by its activity Term stock Definition a certificate of ownership that represents an equal share in the ownership of a corporation Term account Definition a record of increases and decreases in the dollar amount associated with a specific resource or activity Term asset Definition resource controlled by a business Term balance sheet Definition a financial statement that identifies a company's assets and claims to those assets by creditors and owners at a specific date Term business activities Definition events that occur when a business acquires, uses, or sells resources or claims to those resources Term cash Definition the financial resources in the form of coins and currency, bank deposits, and short-term investments that can be converted easily into currency that can be used to pay for resources and obligations of a company Term contributed capital Definition an owners' equity account that identifies amounts contributed to a company by its owners; the direct investment made by stockholders in a corporation Term cost of goods sold Definition an expense that identifies the cost to the company of teh goods transferred to customers Term credits Definition decrease in elements on the left side of the accounting equation and increases in elements on the right side of the equation Term debits Definition increase in elements on the left side of the accounting equation and decrease in elements on the right side of the equation Term expense Definition the amount of resources consumed in the process of acquiring and selling goods and services Term financial statements Definition reports that summarize the results of a company's accounting transactions for a fiscal period Term financing activities Definition events that occur when owners or creditors provide resources to a company or when a company transfers resources tow owners or creditors Term fiscal period Definition any time period for which a company wants to report its financial activities Term income statement Definition a financial statement that reports revenues and expenses for a fiscal period as a means of determining how well a company has performed in creating profit for its owners Term interest Definition the cost of borrowing that is paid to creditors in addition to the repayment of the principal Term investing activities Definition activities involving the acquisition or disposal of long-term resources used by a business Term liabilities Definition claims of a creditor to a company's resources Term merchandise inventory Definition an asset account that identifies the cost of goods a company has purchased that are available for sale to customers Term net income Definition the amount of profit earned by a business during a fiscal period Term notes payable Definition a liability account used to identify amounts a company owes to creditors with whom a formal agreement, or note, has been signed Term operating activities Definition activities necessary to acquire and sell goods and services Term owners' equity Definition a contribution by owners to a business, along with any profits that are kept in the business Term principal Definition the amount a company borrows Term retained earnings Definition a subcategory of owners' equity that are the accumulated profits of a business that have been reinvested in the business Term return on assets Definition the ratio of net income to total assets; net income divided by total assets Term revenue Definition the amount a company expects to receive when it sells goods or services Term sales revenue Definition revenue that identifies the amount a company earns from selling its products Term statement of cash flows Definition a financial statement that reports events that affected a company's cash account during a fiscal period Term transactions Definition descriptions of business activities or events that are measured in dollar values and recorded in accounts Term accounting cycle Definition the process of recording, summarizing, and reporting accounting information Term accounts payable Definition a liability account that identifies and obligation to pay suppliers in the near future Term accounts receivable Definition an asset account that increases when goods are sold on credit Term accrual accounting Definition a form of accounting in which revenues are recognized when they are earned and expenses are recognized when they are incurred Term accrued expenses Definition expenses recognized prior to the payment of cash Term accrued liabilities Definition liabilites that record the obligation to make payments for expenses that have been incurred or for assets that have been acquired but for which payment has not been made Term accrued revenue Definition revenue recognized prior to the receipt of cash Term accumulated depreciation Definition a contr-asset account used to identify the total amount of depreciation recorded for a company's assets Term adjusting entry Definition a transaction recorded in the accounting system to ensure the correct account balances are reported for a particular fiscal period Term amortization expense Definition the allocation of the cost of long-term intangible assets to the fiscal periods that benefit from their use Term articulation Definition the relationship among financial statements among which the numbers on one statement explain numbers on other statements Term closing entries Definition transactions that reset the balances of each revenue and expense account to zero and transfer these balances to retained earnings Term common stock Definition the stock that conveys primary ownership rights in a corporation Term comprehensive income Definition the change in a company's owners' equity during a period that is the result of all non-owner transactions and activities Term consolidated financial statements Definition a report that includes the activities of the parent and its subsidiaries as though they were one company Term contra account Definition an account that offsets another account Term cost of services sold Definition the cost of material, labor, and other resources consumed directly in producing services sold during a period Term current assets Definition cash or other resources that management expects to convert to cash or consume during the next fiscal year Term current liabilities Definition those obligatoins that management expects to fulfill during the next fiscal year Term current ratio Definition current assets divided by current liabilities Term deferred expense Definition expense recognized after the payment of cash Term deferred revenue Definition revenue recognized after cash has been received Term depletion Definition the process of allocating the cost of natural resources to expenses in the periods that benefit from their use Term depreciation Definition the allocation of the cost of assets to the fiscal periods that benefit form the assets' use Term dividends Definition distributions of cash or stock by a corporation to its stockholders Term earnings per share Definition a measure of the earnings performance of each share of common stock during each fiscal period Term fixed assets Definition long term, tangible resources Term general ledger Definition the primary ledger a company uses to record its account balances; contains records for each control account Term goodwill Definition the excess of the price paid for a company over the fair market value of the net assets of the acquired company Term gross profit Definition the difference between the selling price of goods or services sold to customers during a period and the cost of the goods or sevices sold Term historical cost Definition the purchase or exchange price of an asset or liability at the time it is acquired or incurred Term intangible assets Definition long term legal rights resulting from the ownership of patents, copyrights, trademarks, and similar items Term journal Definition a chronological record of a company's transaction Term ledger Definition a file in which each of a company's accounts and the balances of those accounts are maintained Term liquid assets Definition resources that can be converted to cash in a relatively short period Term long term intangible assets Definition assets that provide benefits to the company fore more than one fiscal period Term long term investments Definition occur when a company lends money to or purchases stock issued by other organizations and does not intend to sell those investments in the coming fiscal year Term long term liabilities Definition obligations not classified as current liabilities Term matching principle Definition an accounting concept which requires companies to recognize the expenses used to generate revenue in the same accounting period in which the revnues are recognized Term operating expenses Definition costs of resources consumed as part of operating activities during a fiscal period and that are not directly associated with specific goods or services Term operating income Definition the excess of gross profit over operating expenses Term parent Definition the controlling corporation Term plant assets Definition long term, tangible resources Term posting Definition the process of transferring transactions to specific accounts in a company's ledger Term prepaid expense Definition an asset account that identifies a resource that has been paid for but not used Term property and equipment Definition long term, tangible assets that are used in a company's operations Term statement of stockholders' equity Definition a financial statement that reports changes in a corporation's owners' equity for a fiscal period Term subsidiaries Definition the companies owned or controlled by the parent corporation Term total revenue Definition the amount earned from selling goods or services Term unearned revenue Definition a liability account that results when a company receives cash from a customer for goods or services to be provided in for the future Term working capital Definition the difference between current assets and current liabilities Term working capital ratio Definition that ratio of current assets to current liabilities