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Accounting Exam 1
chapters 1, 15 -17
| Question | Answer |
|---|---|
| attention directing | reporting and interpreting info that helps managers to focus on operating problems, imperfections, inefficiencies, and opportunities. |
| problem solving | the aspect of accounting that often involves a special study to assess possible courses of action and recommends the best course to follow. |
| Foreign Corrupt Practices Act | US law forbidding bribery and other corrupt practices. requires all publicly held companies to maintain their accounting records in reasonable detail & accuracy and have an appropriate system of internal controls. |
| internal controls | policies to protect & make the most efficient use of an organization's assets. |
| Sarbanes-Oxley Act | 2002 law that requires more top-management oversight of a company's accounting policies and procedures. |
| behavioral implications | accounting system's effect on the behavior, specifically the decisions of the managers. |
| control | implementing plans & using feedback to evaluate the attainment of objectives. |
| performance reports | feedback provided by comparing results with plans & highlighting variances. |
| management by exception | concentrating on areas that deviate from the plan & ignoring areas that are presumed to be running smoothly. |
| value chain | the set of business functions or activities that add value to the products or services of an organization. |
| line managers | managers who are directly involved with making and selling the organization's products or services. |
| staff managers | managers who are advisor to the line managers. They have no authority over line managers, but they help the line managers by providing info & advice. |
| controller | the top accounting officer of an organization who deals mainly with operating matters, such as aiding management decision making. |
| B2C | electronic commerce from business to consumer. |
| B2B | electronic commerce from one business to another. |
| enterprise resource planning systems ERP | integrated info systems that support all functional areas of a company. |
| XBRL | an XM based accounting language that helps communicate financial info electronically. |
| just in time philosophy | a philosophy to eliminate waste by reducing the time products spend in the production process and eliminating the time products spend on activities that do not add value. |
| lean manufacturing | applying continuous process improvements to eliminate waste from the entire enterprise. |
| Six Sigma | a continuous process improvement designed to reduce costs by improving quality. |
| retained earnings | the ownership claim arising from the reinvestment of previous profits. |
| explicit transactions | transactions such as credit sales, credit purchases, cash received on account, and cash disbursed on account, that are supported by source documents. |
| implicit transactions | events, such as the passage of time, that day to day recording procedures temporarily ignore. ex: unpaid wages, prepaid rent, interest owed. |
| adjustments | entries that record implicit transactions, in contrast to the explicit transactions that trigger nearly all day to day routine entries. |
| unexpired cost | any asset that ordinarily becomes an expense in future periods, for example, inventory and prepaid rent. |
| unearned revenue | collections from customers that companies receive and record before they earn the revenue. |
| independent opinion | the accountant's assurance that management's financial statements are in conformity with GAAP. |
| cost recovery | a concept in which companies carry forward as assets such items as inventories, prepayments, and equipment because they expect to recover the cost of these assets the form of cash inflows in future periods. |
| working capital | current assets minus current liabilities. |
| debentures | formal certificates of indebtedness that are accompanied by by a promise to pay interest at a specified annual rate. |
| subordinated | a creditor claim that is junior to the other creditors in exercising claims against assets. |
| earnings per share | net inc divided by the average number of common shares of shares outstanding during the year. |
| cash flow from operating activities | section in statement of cash flows statement that lists the cash flow effects of transactions that affect the income statement. |
| cash flow from investing activities | effects of lending and collecting on loans and acquiring and selling long term assets. |
| cash flow from financing activities | cash flow with effects of obtaining cash from creditors & owners, repaying creditors or buying back stock & paying cash dividends. |
| free cash flows | cash flows form operations less capital expenditures. |
| market value method | method of accounting for investments in equity securities that shows the investment on the balance sheet at market value. under 20% investment |
| trading securites | investments "held for current resale". they are intended to be sold in the near future. |
| available for sale securites | investments that the investor company has no intention of selling in the near future. |
| other comprehensive income | a separate account in the SE section of the balance sheet to which we add items such as unrealized gains and losses. |
| equity method | accounts for the investment at the acquisition cost adjusted for dividends received and the investor's share of earnings or losses of the investee after the date of investment. 20-50% investment. |
| parent company | a company owning more than 50% of another business's stock. |
| subsidiary | a company owned by a parent company that owns more than 50% of it's stock. |
| consolidated financial statements | financial statements that combine the financial statements of the parent company with those of various subsidiaries, as if they were a single entity. |
| minority interests | an account that shows the outside stockholders interest, as opposed to the parent's interest, in a subsidiary corp. |
| component percentages | analysis and presentation of financial statements in percentage form to aid comparability, frequently used when companies differ in size. |
| common-size statements | financial statements expressed in component percentages. |
| time-series comparisons | comparison of a company's financial ratios with its own historical ratios. |
| benchmark comparisons | comparison of a company's financial ratios with general rules of thumb or best-practices ratio. |
| cross-sectional comparisons | comparisons of a company's financial ratios with ratios of similar companies or industry averages for the same period. |
| efficient capital market | a market in which market prices fully reflect all info available to the public. |
Created by:
freisak
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