Term
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Definition
| Reports the amount of assets, liabilities and stockholder's equity of an accounting entitiy at a point of time |
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Term
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Definition
| Reports the revenues less the expenses of that accounting period |
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Term
| Statement of stockholder's equity |
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Definition
| Reports the changes of the company's stockholder equity accounts |
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Term
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Definition
| Reports inflows and outflows of cash during the accounting period in the categories of operating, investing and financing |
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Term
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Definition
Cash
Short-term investments
Accounts receivable
Inventory
Supplies
Prepaid expenses
Equipment
Building
Land
Intangibles |
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Term
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Definition
Accounts payable
Accrued expenses
Anything payable
Unearned revenue |
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Term
| Stockholder's equity include |
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Definition
Common stock
Retained earnings |
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Term
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Definition
| Assets= Liabilities + Stockholder's equity |
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Term
| Costs of goods sold goes on what statement? |
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Definition
| Under the expenses on the income statement |
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Term
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Definition
| Beginning retained earnings + Net income - Dividends |
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Term
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Definition
| Examine the financial reports to ensure that they represent what they claim and conform with GAAP |
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Term
| What do accounting standards have effects on? |
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Definition
Stock price
Bonus received by management and employees
Loss of competitive information |
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Term
| Balance Sheet Header Components |
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Definition
Name of Company
Title of the Statement:Balance Sheet
Specific date of Statement
Unit of measure |
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Term
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Definition
Assets
Current assets
(Cash, short-term investment, accts rec, supplies, prepaird expenses)
Total current assets
Noncurrent assets
(Long-term investments, equipment, property)
Total assets
Liabilities and stockholder's equity
Current liabilities
(Accs payable, accrued expenses payable, unearned revenue
Total current liabilities
Noncurrent liabilities
Notes payable
Total liabilities
Stockolder's equity:
Common stock
Additional paid-in capital
Retained earnings
Total stockholder's equity
Total liabilities and stockholder's equity |
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Term
| Income statement Header components |
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Definition
Name of company
title of statement: Income statement
Accounting period: For the year ending ____
Unite of measure |
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Term
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Definition
Revenues
Expenses
Income before taxes
Income tax expense
Net income |
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Term
| Statement of stockholder's equity |
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Definition
Common stock Retained Earnings
Balance ending previous year
Net income for new year
Dividends for new year
Balance for new year |
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Term
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Definition
Cash flows from operating income
Cash flows investing activities
Cash flows from financing activities
Net increase (decrease) in cash
Cash balance from previous year (add this)
Cash balance for current year |
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Term
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Definition
| Exchanges between entity and one or more parties. |
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Term
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Definition
| Events that are not exchanges between parties but that have a direct and measurable effect on the entity. |
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Term
| Assets increase it will add to |
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Definition
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Term
| Liabilities increase it will add to |
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Definition
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Term
| Common stock and paid in capital always add to |
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Definition
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Term
| Retained Earnings add to and will decrease to |
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Definition
Credit (Net income)
Debit (Dividends declared) |
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Term
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Definition
| A listing of all accounts in the general ledger. Purpose is to make sure debits equal credits. |
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Term
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Definition
| Assets and liabilities are classified into two categories: current and noncurrent |
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Term
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Definition
| Assets to be used or turned into cash within the upcoming year. |
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Term
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Definition
| Obligations to be paid or settled within the next 12 months with current assets |
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Term
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Definition
| Current ratio = Current assets/Current liabilities |
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Term
| Current ratio measures what? |
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Definition
| Does the company have enough short-term resources to pay its short-term debt. |
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Term
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Definition
| Include borrowing money and paying debt, issuing and repurchasing stock and paying dividends |
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Term
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Definition
| Include buying and selling noncurrent assets and investments. |
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Term
| Separate-entity assumption |
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Definition
| Each business's activities must be accounted for separtely from the activities of its owners, all other persons and entities |
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Term
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Definition
| Business will continue operating into the forseeable future long enough to meet its contractual commitments and plans. |
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Term
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Definition
1. Purchase goods and services on credit
2. Give cash to suppliers
3. Sell goods and services to customers
4. Receive cash from customers |
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Term
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Definition
| Increases in assets or settlements of liabilities from ongoing operations of the business |
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Term
| When are revenues earned? |
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Definition
| When the goods or services are provided |
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Term
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Definition
| Outflows or the using up of assets or increase in liabilities from ongoing operations to generate revenues |
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Term
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Definition
| Outflow of cash for any reason |
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Term
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Definition
| Increases in assets or settlement of liabilities from peripheral transactions |
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Term
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Definition
| Decrease in assets or increase in liabilities from peripheral transactions |
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Term
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Definition
| Revenue is recorded when cash is received. Expenses are recorded when cash is paid. |
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Term
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Definition
| Assets, liabilities, revenues and expenses should be recognized when the transactions that casues them occurs. |
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Term
| Cash receieved before company delivers goods or services |
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Definition
Credit unearned revenue
Debit Cash |
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Term
| Company delivers the goods or services |
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Definition
Unearned revenue is reduced
Revenue is recorded |
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Term
| Cash received on the date revenue is earned |
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Definition
Cash debitted
Revenue creditted |
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Term
| Cash received after the company delivers goods or services |
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Definition
Accounts receivable is debited
Revenue is credited |
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Term
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Definition
| Accounts receivable is reduced |
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Term
| If cash is paid before the company receives the goods or services |
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Definition
| Prepaid expense is recorded. |
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Term
| When the expense is incurred what is reduced and what is recorded? |
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Definition
| Prepaid expense is reduced and expense is recorded |
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Term
| When cash is paid on the date the expense is incurred |
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Definition
| Expense is debited and cash is credited |
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Term
| If cash is paid after the company receives goods or services |
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Definition
| A liability payable is credited and expense is debited. |
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Term
| When cash is paid after the expense is incurred |
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Definition
| An expense is debited and a payable is credited |
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Term
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Definition
| Net Income/ Net Sales (Operating Revenues) |
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Term
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Definition
| Previously recorded liabilities that were created when cash was received in advance (unearned revenue) |
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Term
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Definition
| The company paid cash before the expenses are actually incurred. (prepaid expense) |
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Term
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Definition
| Comapany provides goods and services before customers' payment. (Leads to increase in cash and reduction in accounts receivable) |
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Term
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Definition
| Company incurred the expenses before the payment is made. (Leads to decrease in amount payable and decrease in cash) |
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Term
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Definition
| Cash was already received or paid |
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Term
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Definition
| Cash has not yet been received or paid |
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Term
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Definition
| Was revenue earned or an expense incurred that is not yet recorded? If yes credit revenue account and debit expense account |
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Term
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Definition
| Net income/ Average number of common shares outstanding during the period |
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Term
| Total asset turnover ratio |
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Definition
| Net sales (Operating revenues)/ Average total assets |
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Term
| What does the total asset turnover ratio do? |
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Definition
| It helps us to determine how efficient management is in using assets to generate sales |
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Term
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Definition
Transfer net income (or loss) to retained earnings
Establish a zero balance in each of the temporary accounts by adding equal amount to either the debit or credit column to start the next accounting period. |
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Term
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Definition
| Principle x INterest rate (number of months/12) = interest for the period |
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