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Definition
| Opportunity, Pressure, Rationalization |
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Term
| Not an objective of internal control system |
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Definition
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Term
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Definition
| managers setting proper "tone at the top" is which component of internal control |
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Term
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Definition
| Ensuring that different employees have responsibilities for handling cash, record-keeping of cash, and approval of cash transactions is part of which internal control procedure. |
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Term
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Definition
| Two or more ppl working together to overcome internal control |
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Term
| Fraudulent financial reporting |
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Definition
| Wrong doing is committed when chief financial officer (CFO) of a corporation records sales revenue that has not actually been earned |
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Term
| Adequate documents and records |
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Definition
| control activity that is illustrated by requiring the use of pre-numbered checks and sales invoices. |
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Term
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Definition
| Considered to be the best as it states that the financial statements are in conformity with US generally accepted accounting principles |
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Definition
| a business entity that has one owner |
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Term
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Definition
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Term
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Definition
| a separate legal entity; double taxation |
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Term
| Generally Accepted Accounting Principles (GAAP) |
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Definition
| rules, principles and concepts established by the accounting profession that govern financial accounting |
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Term
| Financial Accounting Standards Board (FASB) |
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Definition
| a seven person group primarily responsible for the establishment of standards of financial accounting and reporting |
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Term
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Definition
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Term
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Definition
| the amount a business owes to third parties |
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Term
| International Financial Reporting Standards (IFRS) |
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Definition
| accounting standards that are developed by the international accounting standards board. |
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Term
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Definition
| The business entity concept dictates that the financial affairs of a business organization must be kept separate from the personal financial affairs of the business owner. |
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Term
| Reliability or Objectivity Principle |
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Definition
| requires that the accounting information for a business be arrived at objectively so that it may be relied upon by outside users. |
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Term
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Definition
| States that when a business acquires assets or services, they should be recorded at their actual cost/historical cost. |
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Term
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Definition
| the amount of assets owned by the stockholders of the company; In stocks its the paid in capital plus retained earnings |
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Term
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Definition
| records the impact of a business event as it occurs regardless of whether the transaction affected cash or not |
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Term
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Definition
| records expenses when incurred to sell goods or provide services |
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Term
| revenue recognition principle |
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Definition
| records revenue when it is earned |
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Term
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Definition
| any consecutive 12 month period |
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Term
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Definition
| receiving cash from a customer before earning it |
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Term
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Definition
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Term
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Definition
| expense incurred but not paid |
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Term
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Definition
| bonds that all mature at the same time |
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Term
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Definition
| interest rate investors are willing to pay for similar bonds of equal risk |
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Term
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Definition
| unsecured bonds backed only by the good faith of the borrower |
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Term
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Definition
| amount of a bonds issue price over its maturity value |
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Term
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Definition
| bonds that may be converted into the common stock of the issuing company at the option of the investor |
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Term
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Definition
| amount of a bonds maturity value over its issue price |
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Term
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Definition
| interest rate that determines the amount of cash interest the borrower pays and the investor recieves |
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Term
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Definition
| bonds in the same bond issuance that mature at different tims |
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Term
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Definition
| bonds that the issuer may call of pay off at a specified price whenever the issuer wants |
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Term
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Definition
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Term
| accounts receivable turnover |
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Definition
| net credit sales/average net accounts receivable |
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Term
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Definition
| (cash+net current receivables+short term investments)/total current liabilities |
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Term
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Definition
| total liabilities/total assets |
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Term
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Definition
| Balance sheet that separates assets and liabilities into current and long term classes |
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Term
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Definition
| entry affecting more than 2 accounts; has one or more debit or credit |
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Term
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Definition
| cost of inventory that business has sold to customers |
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Term
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Definition
| document that supports return of goods from customer and the adjustment to customers account balance |
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Term
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Definition
| Assets expected to be converted to cash, sold, or consumed within one yr of business operating cycle if cycle is longer than yr |
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Term
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Definition
| debts due to be paid with cash or fulfilled with goods and services within one year or the entity's operating cycle if cycle lasts more than 1 yr |
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Term
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Definition
| current assets to current liabilities; measure of liquidity |
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Term
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Definition
| document that supports return of goods to supplier and adjustment to balance owed to supplier |
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Term
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Definition
| Long term assets of company such as land, building, equipment etc... |
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Term
| Free on board (FOB) destination |
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Definition
| shipping term specifying title to goods passes buyer when goods are recieved at buyers destination; seller pays cost of shipping goods to destination. |
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Term
| Free on board (FOB) shipping point |
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Definition
| title of goods passes to buyer when goods are shipped at sellers place of business; buyer pays cost shipping goods to its location. |
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Term
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Definition
| Net sales revenue minus cost of goods sold; gross profit |
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Term
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Definition
| measure of profitability equal to gross margin divided by net sales revenue; gross profit percentage |
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Term
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Definition
| net sales revenue minus cost of goods sold |
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Term
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Definition
| gross profit minus operating expense; operating income |
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Term
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Definition
| goods purchased for resale to customers in the normal course of merchandising operations; merchandise inventory |
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Term
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Definition
| ability to convert an asset to cash quickly |
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Term
| Multi-step income statement |
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Definition
| calculates net income or net loss by listing important subtotals such as gross profit and operating income. |
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Term
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Definition
| sales revenue less sales discounts and sales returns and allowances. |
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Term
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Definition
| time span during which business obtains resources, uses them to sell goods and services to customers and collects cash from these customers. |
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Term
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Definition
| expenses of operating business other than cost of goods sold; depreciation, rent, salaries, utilities etc... |
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Term
| Periodic Inventory system |
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Definition
| business does not keep continuous record of inventory on hand. At end of period , physical count of inventory is taken and determines inventory owned as well as cost of goods sold. |
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Term
| Perpetual inventory system |
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Definition
| continuous record of inventory on hand and cost of goods sold. |
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Term
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Definition
| Long lived assets of business; land, buildings, furniture etc.. |
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Term
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Definition
| discount received on purchases by paying early with discount period |
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Term
| Purchase returns and allowances |
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Definition
| reduction in amount owed for purchase due to returning merchandise or accepting damaged goods. |
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Term
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Definition
| balance sheet format that reports assets at the top of the report, followed by liabilities, and ending with stockholders equity at the end of the report. |
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Term
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Definition
| buy goods from manufacturer/wholesaler and resell them to general public |
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Term
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Definition
| discount on sales for customers early payment within a discount period; a contra account to sales revenue |
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Term
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Definition
| bill that documents sale of goods to business customer. |
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Term
| Sales returns and allowances |
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Definition
| reduction in amount of sales due to customers returning merchandise or accepting damaged goods; contra account to sales revenue |
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Term
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Definition
| expenses related to advertising and selling products including sales salaries, sales commission, advertising etc... |
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Term
| Single Step income statement |
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Definition
| groups all revenues together and lists all expenses together, subtracting total expenses from total revenues and calculating net income or net loss without computing any subtotals |
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Term
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Definition
| accounting record that contains details such as list of customers and the accounts receivable due from each, or a list of suppliers and the accounts payable due to each. |
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Term
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Definition
| buy goods from manufacturer and resell to retailers. |
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Term
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Definition
| inventory costing method where after each purchase of inventory, a new weighted average cost per unit is computed and used to values ending inventory and cost of goods sold |
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Term
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Definition
| business must report all items in financial statements at amounts that lead to the most cautious immediate results. |
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Term
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Definition
| business should use same accounting methods and procedures from period to period. |
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Term
| Cost of goods available for sale |
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Definition
| cost of inventory on hand at the beginning of the period plus the net cost of inventory purchased during the period. |
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Term
| First-in, First-out (FIFO) |
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Definition
| first inventory costs incurred are the first costs to be assigned to cost of goods sold; FIFO leaves in ending inventory the last, the most recent, costs incurred. |
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Term
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Definition
| disclosures that accompany the financial statements |
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Term
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Definition
| Company's financial statements should report enough info for users to make knowledgable decisions about the company |
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Term
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Definition
| estimating inventory by estimating gross profit, using estimated gross profit to estimate cost of goods sold, and using estimated cost of goods sold to estimate ending inventory |
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Term
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Definition
| record of the quantity of and the cost of inventory items made in a single purchase. |
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Term
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Definition
| ratio of cost of goods sold to average inventory |
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Term
| Last-in, First-out (LIFO) |
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Definition
| last inventory costs incurred are the first costs to be assigned to cost of goods sold; Leaves in ending inventory the first, the oldest, costs incurred. |
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Term
| Lower of cost or market (LCM) rule |
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Definition
| rule that business must report inventory in the financial statements at whichever is lower, the historical cost or market value of each inventory item. |
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Term
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Definition
| Company must perform strict proper accounting only for items that are significant for the business's financial statements. Info is significant, or material, when its presentation in the financial statements would cause someone to change a decision |
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Term
| Perpetual inventory record |
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Definition
| tracks quantity of, and cost assigned to, inventory items as they are purchased and sold. |
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Term
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Definition
| Inventory items used in the production of goods |
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Term
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Definition
| business uses specific cost of each unit of inventory; also called Specific Identification |
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Term
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Definition
| inventory of partially completed good, |
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Term
| Gross Profit Percentage (equation) |
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Definition
| (Gross Profit)/(Net Sales Revenue) |
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Term
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Definition
| (Current Assets)/(Current Liabilities) |
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Term
| Inventory Turnover (equation) |
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Definition
| (Cost of goods sold)/((Beginning Inventory+Ending Inventory)/2) |
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Term
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Definition
Allocating a plant assets cost to expense over its useful life;
Factors:cost, estimated useful and residual life. |
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Term
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Definition
Straight-line-for assets generating rev. evenly over time. units-of-production-for assets that depreciate due to wear and tear
declining-balance-for assets that produce more rev. in their early yrs |
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Term
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Definition
Recorded as debit to assets
Two types:Extraordinary repairs- extends useful life of asset; Betterments-increase capacity or productivity |
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Term
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Definition
Convey special rights to owners (no physical form) and cost amortized to expense over useful life
Specific intangibles:Patent, copyright, trademarks and brand names |
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Term
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Definition
| Known, estimated, contingent liabilities. |
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Term
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Definition
| amount that must be paid back at maturity date |
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Term
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Definition
| Arise from past events and dependent on outcome of future event; example:pending litigation, potential fines etc.. |
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Term
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Definition
| date when principal must be repaid to bondholders |
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Term
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Definition
| determines cash interest payment; printed on bond; remains constant |
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Term
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Definition
| investors willing to pay for similar bonds of equal risk; often differs from stated rate when issued |
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Term
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Definition
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Term
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Definition
| Stated rate less than market rate |
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Term
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Definition
| Market rate less than stated rate |
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Term
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Definition
| Amounts received from stockholders; common stock is main source; externally generated resulting from transactions w/ outsiders. |
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Term
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Definition
| owners have certain advantages over common stock; receive dividends earlier and receive assets before common. |
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Term
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Definition
| Stockholders Equity that cannot be used for dividends; maintained for protection of creditors |
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Term
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Definition
| company buys back its own stock; buy when price is low and sell when high, support stock price, avoid takeover, reward employees with stock. |
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Term
| Financial statement preparation order |
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Definition
| Income statement, Statement of retained earnings, balance sheet, statement of cash flows. |
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Term
| Research and development costs |
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Definition
| generally expensed and become part of income statement |
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Term
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Definition
| Excess of cost of the purchase of a business over the market value of its net assets. |
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Term
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Definition
| obligation resulting from an event that has not yet occurred |
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Term
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Definition
| agreement in which one party (lessee) agrees to pay another (lessor) for the use of an asset |
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Term
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Definition
| treated as rental agreement with the lessee recognizing rent expense |
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Term
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Definition
financial arrangement w/ lessee capitalizing the asset and recognizing depreciation expense
Criteria-transfer title at end of lease, bargain purchase option, lease term>75% of useful life. |
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Term
| Estimated warranty liability |
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Definition
| expense recorded same period the revenue related to warranty is recorded (expense incurred when sale is made); amount of warranty claims filed for a period is unknown so it must be estimated. |
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Term
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Definition
| Stock in the hands of stockholders |
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Term
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Definition
| capital earned through operation of business |
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