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aut/o
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self
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CHAPTER 7
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CHAPTER 7
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current ratio
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current assets/current liabilities
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securitization
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Large businesses and financial institutions frequently package factored receivables as financial instruments or securities and sell them to investors.
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Implementation
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solution is put into effect
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Learning-and-growth Perspective
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identifies the capabilities the organization must excel at to achieve superior internal processes that create value for customers and shareholders
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Governance
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The combination of process and structures implemented by the board to inform, direct, manage, and monitor the activities of the organization toward the achievement of its objectives
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Expenses Normal Balance, Debit or Credit?
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Debit
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Revenues
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The gross increase in stockholders' equity resulting from business activites entered into for the purpoe of earning income.`
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Crazy Eddie
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-Eddie Antar advertised that our prizes are insane in TV
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cheque
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a written order from a depositor telling the bank to pay a stated amount of cash to the person or business named on it
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Certified Fraud Examiners
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Individuals certified as specialists in conducting forensic forensic accounting investigations and advising on fraud risks and other matters.
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cost benefit constraint
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benefits of information should outweigh the cost of gathering and reporting
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Artificial segment on the calender used as the basis for preparing financial statements.
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Time Period
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Ethical Approaches
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Utilitarian: produces most good & does least amount of harm
-Rights: humans have rights & choice to do so as they please. Impair rights or choices of ppl.
-Fairness or Justice approach: treat equally or proportionally if that’s better.
-Common God approach: best for most (welfare for everyone)
-Virtue approach: action consistent with being best
**Make a decision and test it Ace, the reflect on the decision later
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Moral Hazard
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describes a situation in which an employee prefers to exert less effort compared with teh effort desired by the owner because the employee's efforts cannot be accurately monitored and enforced
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selling expenses
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incurred to sell or market the merchandise sold
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credit cards
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visa and mastercard for example. They serve as a special form of factoring because the issuer of the credit card pays the seller the amount of each sale less a service charge(on the date of purchase) and then collects the full amount of the sale from the buyer (at some later date)
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Compensating Control
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An activity that, when taken together with other controls, contributes to the overall effective mitigation risk. Frequently, complementary controls operate across multiple processes and risks
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a company's ___ has the primary responsibility for establishing and maintaining a company's system of internal control
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top management
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General Journal
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gives a complete record of each transaction in one place; also shows the credits/debits of each transaction
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Accounting guidelines, formulated by the Financial Accounting Standards Board, that governs how accounting is practical
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Generally accepted accounting principles (GAAP)
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sales price variance
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a difference between planned and actual revenue caused by a difference between planned and actual prices for one or several products
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Forecasting Earnings
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Net Income as % of investment:
EPS / Mkt Price per Share
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Earnings Per Share (EPS)
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net income / # of shares
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Tone at the Top
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The entity-wide attitude of integrity and control consciousness, as exhibited by the most senior executives of an organization. See also Control Environment.
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capital expenditure
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amount spent to acquire or improve a long-term asset
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What are self-constructed assets?
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Assets constructed by the company itself.
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single-step income statement
multi-step " "
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single step just lists revenues and expenses. multi divides them into various levels of profitability
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24. Limited-liability company
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company in which each member is only liable for his or her own actions or those under his or her control.
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Rate (of a note)
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The stated interest rate on the note
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Hierarchy of Data (low to high)
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bit, byte/character, field, record, file, database
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Rusch Factors, Inc vs Levin
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-Rhode Island federal court held an accountant liable for negligence to a third party not in privity of contract
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unrealized loss on marketable security means...
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historical cost of security exceeds current market value
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Assets are retired for what two reasons?
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physical factors and economic factors
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an example of capital expenditures are...
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taxes paid in conjunction with the purchase of office equipment
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total interest expense over the life of a bond is...
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total sum of payments plus total discount
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What are some examples of events that might lead to an impairment?
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1. A significant decrease in the market value of an asset.2. A significant change in the extent or manner in which an asset is used.3. A significant adverse change in legal factors or in the business climate that affects the value of an asset.4. An accumulation of costs significantly in excess of the amount originally expected to acquire or construct an asset.5. A projection or forecast that demonstrates continuing losses associated with an asset.
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