fullglossary_poa - Copy - FULL GLOSSARY PRINCIPLES OF...

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F ULL G LOSSARY – P RINCIPLES OF A CCOUNTING , 2005 e Accelerated method: A method of depreciation that allocates relatively large amounts of the depreciable cost of an asset to earlier years and reduced amounts to later years. Accounting cycle: The sequence of steps followed in the accounting system to measure business transactions and transform them into financial statements; it includes analyzing and recording transactions, posting entries, adjusting and closing the accounts, and preparing financial statements. Accounting equation: Assets = Liabilities + Owner’s Equity. Accounting information systems: The processes that gather data, put them into useful form, and communicate the results to management. Accounting period issue: The difficulty of assigning revenues and expenses to a short period of time. Accounting rate of return method: A method of evaluating capital investments that does not use an investment’s cash flows but considers the financial reporting effects of the investment instead. Accounting: An information system that measures, processes, and communicates financial information about an identifiable economic entity. Accounts receivable aging method: A method of estimating uncollectible accounts based on the assumption that a predictable proportion of each dollar of accounts receivable outstanding will not be collected. Accounts receivable: Short-term financial assets that arise from sales on credit at the wholesale or retail level. Accounts: The labels used by accountants to accumulate the amounts produced from similar transactions. Accrual accounting: The attempt to record the financial effects of transactions and other events in the periods in which those transactions or events occur, rather than only in the periods in which cash is received or paid by the business; all the techniques developed by accountants to apply the matching rule. Accrual: The recognition of an expense or revenue that has arisen but has not yet been recorded. Accrued expenses: Expenses incurred but not recognized in the accounts; unrecorded expenses. Accrued revenues: Revenues for which a service has been performed or goods delivered but for which no entry has been made; unrecorded revenues. Accumulated depreciation accounts: Contra-asset accounts used to accumulate the depreciation expense of specific long-lived assets. Activity-based costing (ABC): A management accounting practice that identifies all of an organization’s major operating activities (both production and nonproduction), traces costs to those activities, and then assigns costs to the products or services that use the resources and services supplied by those activities; a method of assigning overhead costs that calculates a more accurate product cost than traditional methods by categorizing all indirect costs by activity, tracing the indirect costs to those activities, and assigning those costs to products using a cost driver related to the cause of the cost. Activity-based management (ABM):
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fullglossary_poa - Copy - FULL GLOSSARY PRINCIPLES OF...

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