Horngren_Accounting_Glossary - 25 Horngren - Accounting...

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1025 Absorption costing. The costing method that assigns both variable and fixed manufacturing costs to products (p. 921). Accelerated-depreciation method. A type of depreciation method that writes off a relatively larger amount of the asset’s cost nearer the start of its useful life than does the straight-line method (p. 436). Acceptor of a bill. The person or business required to pay the amount specified in a bill of exchange, and who accepts the bill by signing it. Also called the drawee or addressee of the bill. The acceptor is the debtor (p. 404). Account. The detailed record of the changes that have occurred in a particular asset, liability or owner’s equity during a period—the basic summary device of account- ing (p. 44). Account payable. A liability that is not in written form. Instead, it is backed by the reputation and credit stand- ing of the debtor (p. 14). Account receivable. An asset, a promise to receive cash from customers to whom the business has sold goods (p. 14). Accounting. The information system that measures busi- ness activities, processes that information into reports and communicates the results to decision-makers (p. 2). Accounting controls. Methods and procedures that safe- guard assets, authorise transactions, and ensure the accuracy of the financial records (p. 348). Accounting cycle. Process by which accountants produce an entity’s financial statements for a specific period (p. 136). Accounting entity. An organisation or a section of an organisation that, for accounting purposes, stands apart from other organisations and individuals as a separate economic unit (p. 10). Accounting equation. The most basic tool of accounting, presenting the resources of the business and the claims to those resources. Assets = Liabilities + Owner’s Equity (p. 13). Accounting information system. The combination of personnel, records and procedures that a business uses to meet its need for financial data (p. 310). Accounting modules. Specific computer software usually dealing with a specific part of the accounting cycle, such as the recording, processing and reporting of sales and accounts receivable (p. 316). Accounting period. A period of time for which income and cash flow statements are prepared and which ends on a date on which a balance sheet is prepared (p. 10) . Accounting policies. A specific accounting principle, basis or rule adopted in preparing and presenting a financial report (p. 288). Accounting rate of return. A measure of profitability calcu- lated by dividing the average annual net profit from an asset by the average amount invested the asset (p. 1002). Accounts receivable turnover. Ratio of net credit sales to average net accounts receivable. Measures ability to collect cash from credit customers (p. 745). Accrual accounting.
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This note was uploaded on 10/10/2010 for the course ECON 7300 at University of Sydney.

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Horngren_Accounting_Glossary - 25 Horngren - Accounting...

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