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Definition
| Inflows of assets resulting from the sale of goods and services. |
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Term
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Definition
| Outflow of assets resulting from the sale of goods and services |
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Definition
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Term
| Who is responsible for GAAP? |
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Definition
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| What accounting function can be performed only by a CPA? |
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Definition
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Term
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Definition
| Assets = Liabilities + Owners Equity |
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Term
| Name the 3 activities that business engage in and give examples of each activity. |
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Definition
Operating - Purchase of raw goods for manufacturing
Financing - Buying CDs
Investing - Buying land |
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Term
| What is the the primary objective of financial reporting? |
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Definition
| Provide economic information to permit users of the information to make informed decisions |
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| What makes information relevant? |
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Definition
| It must be able to make a difference in a decision. |
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Term
| Financial information should be understandable to whom? |
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Definition
| Those willing to spend the necessary time to understand it. |
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Term
| What is on the Balance Sheet? |
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Definition
| It lists assets, liabilities and owners’ equity |
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Term
| What is on the Income Statement? |
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Definition
| revenues minus expenses equal net income |
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Term
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Definition
| Current assets – Current liabilities |
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Term
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Definition
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Definition
| Sales – Cost of goods sold |
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Term
| Notes to Financial Statements provide ? |
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Definition
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Definition
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Term
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Definition
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Term
| The Initial recording of transaction is made in a journal/general journal, is called ? |
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Definition
| journal entry, journalizing |
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Term
| What is meant by a double-entry accounting system? |
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Definition
| A system of accounting in which every transaction is recorded with equal debits and credits and the accounting equation is kept in balance. |
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Term
| What is the purpose of a trial balance? |
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Definition
| TO list each account and its balance; used to prove equality of debits and credits. |
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Term
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Definition
| A receivable arising from the sale of goods or services with a verbal promise to pay |
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Term
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Definition
| Amounts owed for inventory, goods or services acquired in the normal course of business |
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Term
| Assets are recorded at historical/original cost because ? |
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Definition
| It is objective and verifiable |
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Term
| When is revenue recognized with respect to accrual accounting? |
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Definition
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Term
| When is revenue recognized with respect to cash basis accounting? |
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Definition
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Term
| When are adjusting entries required? |
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Definition
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Term
| Where are Revenue and expense accounts closed ? |
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Definition
| To Retained Earnings at the end of the year. |
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Term
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Definition
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Term
| When inventory is sold, it becomes a(n) ? |
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Definition
| Expense (cost of goods sold). |
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Term
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Definition
| Terms that require the buyer to pay for the shipping costs. |
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Term
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Definition
| Terms that require the seller to pay for the costs of shipping for merchandise to the buyer |
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Term
| Who would use Specific Identification? |
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Definition
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Term
| What is a cash equivalent? |
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Definition
| Am investment that is readily convertible to a known amount of cash and has an original maturity date to the investor of 3 months or less. |
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Term
| Which asset is most liquid? |
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Definition
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Term
| Can a foolproof Internal Control system be designed? |
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Definition
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Term
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Definition
| Am asset resulting from the acceptance of a promissory note from another company. |
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Term
| Know difference between Accounts Receivable and Notes Receivable |
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Definition
A/R = Short-term, within the current cycle
N/R = Long-term, past the current cycle |
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Term
| In accounting terms, what is a parent and subsidiary? |
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Definition
Parent - An investor with 50% or more in another company
Subsidiary - The investee in above situation. |
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Term
| Book value of an asset = ? |
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Definition
| Cost - Accumulated Depreciation |
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Term
| Which property, plant, and equipment asset is not depreciated? |
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Definition
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Term
| In order to calculate depreciation, what three items need to be known? |
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Definition
1.) Acquisition Cost
2.) Residual Value
3.) Asset Life |
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Term
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Definition
Acquisition Cost - Residual Value
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Life |
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Term
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Definition
| The process of allocating the cost of a long-term tangible asset over its useful life |
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Term
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Definition
| The process of allocating the cost of a limited life or intangible asset over its useful life |
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Term
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Definition
| An obligation that will be satisfied within the next operating cycle or withing one year if the cycle is shorter than a year |
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Term
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Definition
Current Assets
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Current Liabilities |
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Term
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Definition
| An existing condition for which the outcome is not known but depends on some future event |
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Term
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Definition
| An obligation that will not be satisfied within one year or the current operationg cycle |
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Term
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Definition
| Bonds that may be redeemed or retired before their specified due date |
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Term
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Definition
| Bonds that can be converted into common stock at a future time |
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Term
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Definition
| Bonds that are not backed by specific collateral |
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Term
| Discount on Bonds Payable is what type of account? |
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Definition
| A contra account to Bonds Payable |
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Term
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Definition
| A lease where the lessee has acquired sufficient rights of ownership and control of the property to be considered its owner |
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