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Finance Accounting 1
SSCT Finance Accounting
| Question | Answer |
|---|---|
| Accounting | the information system that identifies, records, and communicates the economic events of an organization to interested users. |
| Assets | Resources a business owns |
| Balance Sheet | A financial statement that reports the assets, liabilities, and owner's equity at a specific date. |
| Basic accounting equation | Assets = liabilities + stockholder's equity |
| Bookkeeping | A part of accounting that involves only the recording of economic events |
| Corporation | A business organized as a separate legal entity under state corporation law, having ownership divided into transferable shares of stock. |
| Cost Principle | An accounting principle that states that companies should record assets at their cost. |
| Dividend | A distribution by a corporation to its stockholders on a pro rata (equal) basis. |
| Economic entity assumption | An assumption that requires that the activities of the entity be kep separate and distinct from the activities of its owner and all other economic entities. |
| Ethics | The standards of conduct by which one's actions are judged as right or wrong, honest or dishonest, fair or not fair. |
| Expenses | The cost of assets consumed or services used in the process of earning revenue. |
| Financial Accounting | The field of accounting that provides economic and financial information for investors, creditors and other external users. |
| Financial Accounting Standards Board (FASB) | A private organization that establishes generally accepted accounting principles. |
| FASB | Financial Accounting Standards Board |
| Generally accepted accounting principles (GAAP) | Common standards that indicate how to report economic events. |
| GAAP | generally accepted accounting principles |
| Income Statement | A financial statement that presents the revenues and expenses and resulting net income or net loss of a company for a specific period of time. |
| International Accounting Standards Board (IASB) | An accounting standard-setting body that issues standards adopted by many countries outside of the United States. |
| IASB | International Accounting Standards Board |
| Liabilities | Creditor claims on total assets |
| Managerial Accounting | The field of accounting that provides internal reports to helop users make decisions about their companies. |
| Monetary unit assumption | An assumption stating that companies include in the accounting records only transaction data that can be expressed in terms of money. |
| Net income | The amount by which revenues exceed expenses |
| Net loss | The amount by which expenses exceed revenues. |
| Partnership | A Business owned by two or more persons associated as partners. |
| Proprietorship | A business owned by one person. |
| Retained earnings statement | A financial statement that summarizes the changes in retained earnings for a specific period of time. |
| Revenues | The gross increase in owner's equity resulting from business activities entered into for the purpose of earning income. |
| Sarbanes-Oxley Act of 2002 (SOX) | Law passed by Congress in 2002 intended to reduce unethical corporate behavior. |
| Securities and Exchange Commission (SEC) | A government agency that requires companies to file financial reports in accordance with generally accepted accounting principles. |
| Statement of cash flows | A financial statement that summarizes information about the cash inflows (receipts) and cash outflows (payments) for a specific period of time. |
| Stockholder's equity | The ownership claim on a corporation's total assets. |
| Transactions | The economic events of a business that are recorded by accountants. |
| Account | A record of increases and decreases in specific asset, liability, or stockholders' equity items. |
| Chart of Accounts | A list of accounts and the account numbers that identify their location in the ledger. |
| Common stock | Issued in exhange for the owners investment paid in to the corporation. |
| Compound entry | A journal entry that involves three or more accounts. |
| Credit | The right side of an account. |
| Debit | The left side of an account. |
| Dividend | A distribution by a corporation to its stockholders on a pro rata (equal) basis. |
| Double-entry system | A system that records in appropriate accounts the dual effect of each transaction. |
| General journal | The most basic form of journal |
| General Ledger | A ledger that contains all asset, liability, and stockholders' equity accounts. |
| Journal | An accounting record in which transactions are initially recorded in chronological order. |
| Journalizing | The entering of transaction data in the journal. |
| Ledger | The entire group of accounts maintained by a company. |
| Normal Balance | An account balance on the side where an increase in the account is recorded |
| Posting | The transfer of journal entries to the ledge accounts. |
| Retained earnings | Net income that is kep (retained) in the business. |
| Simple Entry | A journal entry that involves only two accounts. |
| T account | The basic form of an account. |
| Three-column form of account | A form with columns for debit, credit, and balance amounts in an account. |
| Trial balance | A list of accounts and their balances at a given time. |
| Accrual-basis accounting | Acounting basis in which companies record transactions that change a company's financial statements in the periods in which the events occur. |
| Accruals | Adjusting entries for either accrued revenues or accrued expenses. |
| Accrued expense | Expenses incurred but not yet paid in cash or recorded. |
| Accrued revenues | Revenues earned but not yet received in cash or recorded. |
| Adjusted trial balance | A list of accounts and their balances after the company has made all adjustments. |
| Adjusting entries | Entries made at the end of an accounting period to ensure that companies follow the revenue recognition and matching principles. |
| Book value | The difference between the cost of a depreciable asset and its related accumulated depreciation. |
| Calendar year | An accounting period that extends from January 1 to December 31. |
| Cash-basis accounting | Accounting basis in which companies record revenue when they receive cash and an expense when they pay cash. |
| Contra asset account | An account offset against an asset account on the balance sheet. |
| Deferrals | Adjusting entries for either prepaid expenses or unearned revenues. |
| Depreciation | The allocations of the cost of an asset to expense over its useful life in a rationa and systematic manner. |
| Fiscal year | An accounting period that is one year in length. |
| Interim periods | Monthly or quarterly accounting time periods. |
| Matching principle | The principle that companies match efforts (expenses) with accomplishments (revenues) |
| Prepaid expenses | Expenses paid in cash that benefit more than one accounting period and that are recorded as assets. |
| Revenue recognition principle | The principle that companies recognize revenue in the accounting period in which it is earned. |
| Time period assumption | An assumption that accountatns can divide the economic life of a business into artificial time periods. |
| Unearned revenues | Cash received and recorded as liabilities before revenue is earned. |
| Useful life | The length of service of a productive facility. |
| Classified balance sheet | A balance sheet that contains a number of standard classifications or sections. |
| Closing entries | Entries made at the end of an accounting period to transfer the balances of temporary accounts to a permanent stockholders equity account, Retained earnings |
| Correcting entries | Entries to correct errors made in recording transactions |
| Current Assets | Assets that a company expects to convert to cash or use up within one year. |
| Current Liabilities | obligations that a company expects to pay from existing current assets within the coming year. |
| Income Summary | A temporary account used in closing revenue and expense accounts. |
| Intangible assets | Noncurrent assets that do not have physical substance. |
| Liquidity | The ability of a company to pay obligations expected to be due within the next year. |
| Long-term investments | Generally, investments in stocks and bonds of ther companies that companies normally hold for many years. Also includes long-term assets, such as land and buildings, not currently being used in operations. |
| Long-term liabilites | Obligations that a company expects to pay after one year. |
| Operating cycle | The average time that it takes to go from cash to cash in producing revenues |
| Permanent (real) accounts | Accounts that relate to one or more accounting periods. Consist of all balance sheet accounts. Balances are carried forward to next accounting period. |
| Post-closing trial balance | A list of permanent accounts and their balances after a company has journalized and posted closing entries. |
| Property, plant, and equipment | Assets with relatively long useful lives, currently being used in operations. |
| Reversing entry | An entry, made at the beginning of the next accounting period that is the exact opposite of the adjusting entry made in the previous period. |
| Stockholders' Equity | The ownership claim of shareholders on total assets. It is to a coporation what owner's equity is to a proprietorship. |
| Temporary (nominal) accounts | Accounts that relate only to a given accounting period. Consist of all income statement accounts and the Dividends account. All temporary accounts are closed at end of accounting period. |
| Worksheet | A multiple-column form that may be used in making adjusting entries and in preparing financial statements. |
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dmdisme
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