Accounting 103 Flashcards

Terms Definitions
owner equity,credit, BS
pre paid expenses
unearned revenues
information for each transaction recorded in a journal
in some circumstances
in manchen Fällen
Lump sum e
single future amount
An amount owed by a business
Financing activities
Business activities that involve obtaining resources from stockholders and creditors and providing the former with a return on their investments and the latter with repayment
Permanent Accounts
Accounts that reflect activities related to one or more future periods; balance sheet accounts whose balances are not closed; also called real accounts.
definition and advantages/disadvantages
owned by one individual.
Disadvantage-financial resources available are limited to the individual owners resources all liability is on the owner
Advantage- easy and inexpensive to organize
Formula for ROE
Net Income/Average Total Equity
accounting equation
Assets = Liabilities + Owner's Equity
accounting cycle
the series of accounting activities included in recording financial information for a fiscal period
the account used to summarize the owner's equity in a business
External controls
the measures and procedures provided outside the business to protect cash and other assets
Accounting System
A planned process for providing financial information that will be useful to management
AR turnover
how many times converts into cash
Indirect material
materials used to suport the production process. ex.Lubricants and cleaning supplies
Important sources of short-term credit to healthcare providers
commercial banks
The Matching Principle
Measure all expenses incurred during the accounting period. Match the expenses against the revenues earned during the same period
errors made by the bank, incorrectly increase or decrease the bank balance, correct all to balance out the errors
bank errors
Finished goods
product fully completed but not yet sold.
First-In, First-Out(FIFO)
Assumes costs flow in the order incurred.
issuance of long-term note payable to borrow cash
inc financing
Budgetary Control
The use of budgets to control operations
note payable
made by the party needing TO pay
the cost of ___is not depreciated b/c ____ is assumed to have an unlimited life
common stock
the total amount paid by stockholders for the shares they purchase
property or items of value owned by a business.
Controlling Account
The account in a general ledger that summarized all accounts in a subsidiary ledger. (Examples = Accounts Receivable and Accounts Payable.)
Conversion cost
a term referring to direct labor and factory overhead costs, collectively
person to whom an order is given to pay money in a draft
source document
a business paper from which info is obtained for a journal entry
Fiscal period
the length of time for which a business summarizes and reports financial information
sales journal
a special journal used to record sales of merchandise on credit
Net Income + Interest expense/average total assets
return on total assets
The one to whom the bank is order to pay the cash
Petty Cash
an amount of cash kept on hand and used for making small payments
Direct Write-off Method
Records bad debt expense only when the account is determined to be worthless (not GAAP)
The number that is multiplied by the principal, to get Gross Return. For example, 100x 1.1= 110. The Gross Factor is 1.1
Gross Return Factor
Statement of Retained Earnings
The financial statement that shows the changes in retained earnings over a period of time.
What is treasury stock
issued shares of stock that have been repurchased by the company. It is a contra equity account so it carries a debit balance and reduces stockholders' equity
Statement of cash flows
shows the inflows and outflows of cash for the accounting period
3 sections - Operating - revenues and expenses, Investing - sale and purchase of long term assets and Financing- borrowing or repayment of long term debt, transactions for our own company's stock including dividends
Long term liabilities(long term debt)
Obligations that a company expects to pay after one year
The Retained Earnings Statement
This is the net income retained in the corporation. The statement shows the amounts and causes of changes during the period.
What is the formula for Labor Efficiency Variance
Actual hours - Standard Hours X standard rate (AH- SH) SR
what is the cost benefit trade off?
if the cost of control outweighs the benefit its not worth it
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