Accounting Key Terms Flashcards

Terms Definitions
total materials variance
profits paid to investors
asset account
accounts receivable is a/an
Two-Column Journal
Basic all purpose journal
Account balance
the amount in an account
activity, resource, or policy that limits or bounds the attainment of an objective
Declining-balance Method
Method that determines depreciation charge for the period by multiplying a depreciation rate (often twice the straight-line rate) by the asset's beginning-period book value.
must strictly follow GAAP for significant items that would cause a user to change a decision.
Not a qualitative characteristic, but a practical justification for some accounting choices.
Purchases Journal
Records purchases of inventory and supplies on account as well as expenses incurred on account
net loss
The difference between total revenue and total expenses when total expenses are greater
a total written in smal pencil figures, under the last entry in a column of an account
Critical Issue
determining when the expenses makes its contribution to revenue
income statement
fin statement that shows the profitability of the company for a period of time (usually a year)
Financing Activities
Activities that include (a) obtaining cash from issuing debt and repaying the amounts borrowed, and (b) obtaining cash from stockholders, repurchasing shares, and paying dividends
Natural Resources
Long-term assets purchased for the economic value that can be taken from the land and used up
Ending inventory
Beginning Inventory + purchases = goods available.........goods available - cost of goods sold = ending inventory.
File Maintenance
The procedure for arranging accounts in a general
written promise to pay the bond's par value and interest at a stated contract rate
proving cash
the process of determining whether the amount of cash, both on hand and in the bank, is the same as that which is indicated in the accounting records
General Journal
is used for transactions not included in any of the special journals. Examples of these transactions include adjusting entries, reversing entries and closing entries.
Purchase method
A method of accounting for controlling investments in which similar accounts from the parent's and subsidiaries' statements are combined
an organization or a section of an organization that for accounting purposes stands apart from other organizations and individuals as a separate economic unit
Debit Card
a bank card that, when making purcheses, automaticaly deducts the amount of the purchase from the checking account of the card holder.
The costs of goods and services used to operate a business.
what are dividends?
 on the balance sheet. Distributions of assets to shareholders, decreases Retained earnings.
Examp[les of Deferred revenue
unearned revenue, fees, tuition, premiums in advance, mag subscriptions
Par Value
Arbitrary value assigned by corp and the state to the value of shares of stock
Monetary Unit Assumption
Only transaction date capable of being expressed in terms of money should be included in the accounting records of the economic entity.
trade discount
a reduction in the list price granted to customers
opening an account
Writing the account title and number on the heading of an account.
General Ledger
Is a collection of all the asset, liability, owners equity, revenue, and expense account.
Callable bonds
May be retired and repaid (called) at any time by the issuer.
**DuPont model**
**[net income (or profit) / sales] x [sales / total assets] = [net income / total assets] = ROI (return on investment)**
what does retained earnings mean?
the income/loss of business operations
PCAOB Public company accounting oversight board
charged with determining auditing standards
Subsidiary Ledger
Ledger that is used for a single type of account and is subordinate to the gerneral ledger
Point-of-Sale (POS) Terminal
A computer used to collect, store, and report all the information of a sales transaction
an owner of one or more shares of a corporation
which of the following types of subsequent expenditures normally are capitalized?
Additions, improvements, and rearrangements.
Petty Cash
An amount of cash kept on hand and used for making
standard hours per unit
the amount of direct labor time that should be required to complete a single unit of product
Steps of the revenue cycle? (4)
1. Sales order entry2. Shipping3. Billing4. Collecting
relaxing (or elevating) the constraint
an action that increases the amount of a constrained resource. Equivalently, an action that increases the capacity of the bottleneck
Margin of Safety $$ =Margin of Safety (units)=Margin of Safety%=
Actual Sales-Break Even SalesActual Units-Break Even UnitsAcutal Sales-Break even sales / Actual Sales
Ch. 3
What does revenue realization mean? 
earned and collectable
What are the two methods for reporting stock options? What method is acceptable to the FASB?
There is the intrinsic method, and the fair value method. The fair value method is acceptable to be used by the FASB
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