Accounting 111 Flashcards

Terms Definitions
journal
see general journal
Profit centers
Revenues and costs
accountants
design accounting information systerm focus on analyzing and interpreting information 150 credit hours to sit for a CPA exam
Journalizing
recording transactions in a journal
ARR Formula
Accounting Income / Investment
Accrual Accounting
Recognizing transaction when the revenue is earned
treasury stock appears as
an equity account
Retailer
Intermediary that buys products from manufacturers or wholesalers and sells them to consumers.
Operating Activity
Collections from customers (income) and payment of wages (outflow) are examples of this type of cash flow.
Adjusting entries affect only the owner's equity accounts.
True/False
False
Contra Account
Account linked with another account and having an opposite normal balance; reported as a subtraction from the other account's balance.
customer
or business to whom merchandise or services are sold
Conservatism
The convention that when faced with two equally acceptable alternatives, the accountant choses the one least likely to overstate assets and income.
Depreciation Expense
DDB rate x asset book value
Temporary Accounts
Accounts used to record revenues, expenses, and withdrawals (dividends for a corporation); they are closed at the end of each period; also called nominal accounts.
Accounting
is an information system that provides reports to users about the economic activities and conditions of a business., the occupation of maintaining and auditing records and preparing financial reports for a business
True or False
U.S. companies may file their financial statements with the SEC using either the cash basis or the accrual basis of accounting.
False
Copyrights
gives the owner the exclusive right to manufacture/print and sell music, literature, and art
stakeholders
any person or groups who will be affected by an action
ethics
the principles of right and wrong that guide an individual in making decisions
double-entry accounting
The recording of debit and credit parts of a transaction
Payee
Person or Business to which the check is written
Break-Even Point
Level of operations at which a company's revenues and expenses are equal.
supply chain management
the coordination and control of materials, services, information, and finances as they move in a process from the supplier, through the manufacturer, wholesaler, and retailer to the consumer
T account
an accounting device used to analyze transactions
Gross Profit
Net Sales - Cost of Goods Sold
Accounting System
Method to record, store and report acocunting information rleated to a company's transactions and events
Invoice
the bill that the seller sends to the buyer
Social Security Tax
a federal tax paid for old-age, survivors, and disability insurance
Paid in capital
is the amount the stockholders have invested on the corporation. its basic component is common stock
payroll taxes
taxes based on the payroll of a business
Effective Interest Method
Total bond interest expense over the bonds' life in a way that yeilds a constant rate of interest
Restrictive Endorsement
For deposit only, the account of and company, and signature
Fiduciary Funds are
accrual basis except for certain liab. of defined benefit pension plans and certain postunemployment healthcare plans
Primary Key for a Sales order table (inventory and customer order)
Sales order
cost of capital
the opportunity cost of money in the form of returns from alternate investments.
Schedule of Accounts Payable
A listing of vendor accounts, account balances, and total amount due all vendors.
selling expense budget
Plan that lists the types and amounts of selling expenses expected in the budget period.
Going-concern assumption—financial statements
are to reflect the assumption that the business will continue operating instead of being closed or sold.
Every event should be linked to what?
At least one resource.
CHART OF ACCOUNTS
a list of all accounts used by a business
Permanent (or real) accounts
report on activities related to one or more future accounting periods. They carry their ending
What's an agency contract?
Owners hire managers to work for them delegating authority to conduct business.
Prepare and use an adjusting worksheet
accountants use working papers to help organize their work and to provide evidence in support of the financial statements. The work sheet is one such working paper. It decreases the chance of overlooking an adjustment, acts as a check in the arithmetical accuracy of the accounts, provides evidence of past work so that accountants can retrace their steps, and hels in preparing financial statements. The work sheet is never published and is rearrely seen by management. It is a useful took for the accountant.
Two exceptions to the rule of normal account balances
Expenses and Dividends have Debit Normal Balance
The form of inventory financing used depends on
the type of inventory and situation at hand
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Term:
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