Shared Flashcard Set

Details

Exam 1
N/a
66
Accounting
Undergraduate 4
10/05/2015

Additional Accounting Flashcards

 


 

Cards

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