Term
| an information and measurement system that identifies, records and communicates relevant, reliable and comparable information about an organization's business activities |
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| the recording of transactions and events, either manually or electronically |
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| Recordkeeping or bookkeeping |
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| not directly involved in running the organization. (shareholders, lenders, directiors, customers, suppliers, regulators, lawyers, brokers, and the press) |
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| The area of accounting aimed at serving external users by providing them with financial statements. |
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| Accounting information are those directly involved in managing and operating an organization. (managers of key operationg activities) |
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| the area of accounting that serves the decision-making needs of internal users |
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| Financial opportunities in accounting |
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| preparation, analysis, auditing, regulatory, consulting, planning, criminal investigation |
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| Managerial opportunities in accounting |
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| general accounting, cost accounting, budgeting, internal auditing, consulting, controller, treasurer, strategy |
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| Taxation opportunities in accounting |
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| preparation, planning, regulatory, investigaitions, consulting, enforcement, legal services, setate plans |
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| Accounting-related opportunities |
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| lenders, consultants, analysts, traders, directors, underwriters, planners |
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| Beliefs that distinguish right form wrong |
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| the private group that sets both broad and spcific principles |
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| Financial Accounting Standards Board (FASB) |
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| the government group that establishes reporting requirements for companies that issue stock to the public |
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| Securities and Exchange Commission (SEC) |
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| Issues International Financial Reporting Standards (IFRS) that identify preferred accounting practices |
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| International Accounting Standards Board (IASB) |
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| Accounting information is supported by independent, unbiased evidence |
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| that accounting information is based on actual cost. |
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| means that accounting information replects an assumption that the business will contuinue operating instead of being closed or sold |
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| we can express transactions and events in monetary, or money, units |
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| provides guidance on when a company must recognize revenue |
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| revenue recognition principle |
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| a business is accounted for separately from other business entities, including its owner |
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| business entity principle |
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| a business owned by one person |
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| a business owned by two or more people |
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| a business legally separate form its owners, meaning it is responsible for its own acts and its own debts |
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| Shareholders or stockholders |
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| when a corporation issues only one class of stock |
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| Congress passed an actto help curb financial abuses at companies that issue their stock to the public...requires that these public companies apply both accounting oversight and stringent internal controls |
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| resources with future two basic aspects of a company: what it wons and what it owes |
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| What a company owes its creditors in future payments, products, or services |
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| Liabilities and equities are the source of funds to acquire assests |
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| Assets= Liabilities + Equity |
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| Resources owned or controlled by a company |
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| Creditors' claims on assets |
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| the owner's claims on assets |
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| Assets = Liabilities + Contributed Capital + Retained EArnings |
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| Assets = Liabilites + Common Stock - Dividends + Revenues - Expenses |
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| Assets = Liabilities + Contributed Capital + Retained EArnings |
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Definition
| Assets = Liabilites + Common Stock - Dividends + Revenues - Expenses |
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| describes a company's revenues and expenses allong with the resulting net income or loss over a period of time due to earnings activities |
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| explains changes in retained earning from net income (or loss) and from any dividends over a period of time |
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| Statemnet of retained earnings |
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| Describes a company's financial position (types and amounts of assets, liabilities and equity)at a point in time |
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| identifies cash inflows (receipts) and chash out flows (payments) over a period of time |
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| identify and describe transactions and eents entering the accounting process |
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| a recor of increases and decreases in a specific asset, liability, equity, revenue or expense item |
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| a record containing all accounts used by a company |
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| Asset accounts = liability + Equity Accounts |
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| account reflects a company's cash balance |
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| held by a seller and refer to promises of payment from customres to sellers |
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| promissory note, is a written promise of another entity to pay a definity sum of money on a specified future date to the holder of the note |
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| assets that represent prepayments of future expense (not current expenses) |
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| refers to a liability that is settled in the future when a company delivers its products or services |
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| Debit for increase (+) Credit for decreases (-) |
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| Debit for decreases (-) Credot fp romcreases (+) |
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| Debit for decreases (-) Credot fp romcreases (+) |
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| Debit for decreases (-) Credit for increase (+) |
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| Gives a complete recod of each transaction in one place |
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| reports the revenues earned less then expenses incurred by a business over a period of time |
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| the statement of retained earnings reports incomration about how retained earnings changes over the reporting period |
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| statement of retained earnings |
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| reports the financial position of a company at a point in time, usually at the end of a month, quarter or year |
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| assumes that an organization's activities can be divided into specific time periods such as a month, a 3 month quorter, 6 month intervals or a year |
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| the annual reporting period is not always a calendar year ending on dec. 31st |
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| uses the adjusting process to recognize revenues when earned and expenses when incurred |
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| recognizes revenues when cash is received and records expenses when cash is paid |
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| aims to record expenses in the same accounting period as the revenues that are earned as a result of these expenses |
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| refer to items paid for in advance of receiving their benefits...they are assets |
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| the process of allocating the cost of these assets over their expected useful lives |
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| allocateds equal amounts of an asse's net cost to depreciation during its useful life |
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| straight-line depreciation |
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| an account linked with another account, it has an opposite normal balance, and it is reported as a subtraction fromthat other account's balance |
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| refer to costs that are incurred in a period but are both unpaid and unrecorded |
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| Computing accured interest |
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Definition
| principal amount owed X Annual interest rate X fraction of year since last payment date |
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| revenues earned in aperiod that are both unrecorded and not yet received in cash (or other assets) |
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| a list of accounts and balances prepared before adjustments are recorded |
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| a list of accounts and balances prepared after adjusting entries have been recorded and posted to the ledger |
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| cash and toher resources that are expected to be sold, collected or used within one year or the company's operating cycle, whichever is longer |
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| notes receivable and investments in stocks and bonds are long-term assets when they are expected to be held ofor more than the longer of one year or the operating cycle |
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| long-term resources that benefit business operations |
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| obligations due to be paid or settled within one year or the operating cycle, whichever is longer |
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| obligations not due whitin one year or the operating cycle, whichever is longer |
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| profit margin, or return on sales |
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Definition
| profit margin= net income/net sales |
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| current ratio is one measure of a company's ability to pay its short-term obligations. |
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Definition
| current ratio = current assets/current liabilities |
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