Accounting Terms Review Flashcards

Terms Definitions
Asset/BS/^C
Land
Liabilities =
assets- capital
current
less than 12 months
permanent (alse)
assets, liabilities, stockholders equity
Bank Reconciliations
1.     Deposits in transit
2.     Outstanding Checks
3.     Errors
4.     Bank Memoranda
Income
Increase in the owners equity resulting from business operations
unearned revenue
previously recorded liabilities that needs to be adjusted to reflect the revenue now earned
asset
Anything of value that is owned
Assets
Economic resources owned by the entity
Assets
Economic resources owned by a business that are expected to benefit future operations.
Mixed cost
part fixed, part variable- has components of both has a fixed minimum charge even though you don't use it at all, variable is charge per kilowatts or energy used
step 2
Make expense accounts and contra revenues equal zero via the Income summary account. This closing entry transfers total expenses and contra revenues (debit balance accounts) to the debit side of Income summary,
current ratio
Current ratio = current assets/current liabilities
balance sheet
financial stmt that reports assets, liabilities, and owner's equity on a specific date
mortgage payable
involves payment of principal and interest, but it also represents a pledge of certain assets that will revert to the lender if the debt is not paid.
Direct Materials
Raw materials that caan be physically/directly associated with the finished product during the manufacturing process
Payroll
The total amount earned by all employees for a pay period
Free Cash Flow
Cash Provided by Operations-Capital Expenditures-Cash Dividends
As the volume of activity increases, total variable cost will:
Increase
Capital
The net value of an owners financial interest in a business
Operating Activities.
-Daily Activities businesses do on a daily basis.
-These activities include NET income, change in short term assets, and current liab.
- Rev. and Exp.
-Sales to Customers
Dishonored Check
A check returned to the depositor unpaid because of insufficient funds in the drawer's account; also called and NSF check.
apply = PDOH rate x standard hrs
** know
Double-Entry Accounting
the recording of debit and credit parts of a transaction
capital stock
Total shares of ownership in a corporation
financing activities
cash is often obtained from outside sources to start or expand a buisness. the two primary sources are
-borrowing from creditors which creates liability
----bank loan(note payable)
----debt securities(bonds payable)
----goods on credit(accounts payable)
-issuing ownership interests in the corporation to investors(selling stock to shareholders)
-includes cash to pay dividends to stockholders
Work in Progress
The portion of manufactured inventory that has begun the production process but is not yet complete
What is the current ratio
current assets/ current liability
constraint
exists when a limited resource of some type restricts the companys ability to satisfy demand
Credit side
the right side of a standard account is called the
normal operating cycle
the period of time required to purchase goods and services and turn them back into cahs is
adjusting entries
entries made at the end of the accounting period for the purpose of recognizing revenue and expenses that were not counted yet
Delivery Expense
reported as a selling expense in the seller's income statement
retained earnings
an amount earned by a corporation and not yet distributed to stockholders
SOLE PROPRIETORSHIP DEFINED
1. SINGLE OWNER
2. ASSUMES ALL THE RISKS
Share of Stock
A unit of ownership in a corporation.
Revenue Recognition Principle
When co. recognizes revenue, not too early or too late.
make or buy decision
a decision concerning whether an item should be produced internally or purchased from an outside supplier
Payroll Register
Record for a pay period that shows the pay period dates, regular and overtime hours worked, gross pay, net pay, and deductions.
Order of liquidity
Listing the assets in the order in which they will turn into cash. Libilities are listed in the order in which they will be payed.
eg. Assets;
1. Cash in bank
2. A/c receivable
3. inventeniors/stock
4. computers
5. Land, veichles, funiture.. etc.
market value
price at which a stock is bought and sold
Examples of Current Liabilities
Accounts Payable, S-T Notes Payable, Warranty Liabilities *, Lease Liabilities *, Wages Payable, Taxes Payable, Unearned Revenues, Any liability w/o a fixed date
book value of accounts receivable
the difference between the balance of Accounts Receivable and its contra accounts, Allowance for Uncollectible Accounts
Toys "R" Us had cost of goods sold in 2004 of $7,506 million and $7,646 million in 2003.  Their merchandise inventory in 2004 was $1,884 million and $2,064 million in 2003.  How long were their average days to sell inventory in 2004?
96.82 days
paid-in-capital in excess of par value
amount received from issuance of stock that is in excess of the stock's par value
How does accounts recieveable affects assets?
Increases them -- rev. rec. principle states that we record the revenue in the period we earn it
What are the three types of hedges?
Fair value hedge, Cash flow hedge, Foreign currency hedge
IRR - Internal Rate of return method
it finds the interest yield of the potential investment.
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