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Flashcards in Chapter 16 Deck (52)
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1
Q

accounting

A

the process of collecting, recording, classifying, summarizing, reporting, and analyzing financial activites

2
Q

managerial accounting

A

accounting that provides financial information that managers inside the organization can use to evaluate and make decisions about current and future operations

3
Q

financial accounting

A

accounting that focuses in preparing external financial reports that are used by outsiders such as creditors, lenders, suppliers, investors, and government agencies to assess the financial strength of a business

4
Q

generally accepted accounting principles (GAAP)

A

the financial accounting rules, standards, and usual practices followed by accountants in Canada when preparing financial statements ,until January 2011

5
Q

International Financial Reporting Standards (IFRS)

A

a set of globally accepted accounting standards adopted in Canada on January 1, 2011, for public companies and those private companies that chose to adopt them

6
Q

Accounting Standards for Private Enterprises (ASPE)

A

the accounting framework designed to replace Canadian GAAP for private companies

7
Q

annual report

A

a yearly document that describes a company’s financial status and usually discusses the company’s activities during the past year and its prospects for the future

8
Q

chartered accountant (CA)

A

an accountant who typically provides tax, audit, and management services

9
Q

certified management accountant (CMA)

A

an accountant who works primarily in industry and focuses on internal management accounting

10
Q

certified general accountant (CGA)

A

an accountant who focuses primarily on external financial reporting

11
Q

chartered professional accountant (CPA)

A

an accounting designation that unites the various accounting designations in Canada

12
Q

assets

A

things of value owned by a company

13
Q

liabilities

A

what a company owes to its creditors; also called debts

14
Q

owners’ equity

A

the total amount of investment in the company minus and liabilities; also called net worth

15
Q

accounting equation

A

assets = owners equity + liabilities

16
Q

double-entry bookkeeping

A

a method of accounting in which each transaction is recorded as at least two entries, so that the accounts or records are changed

17
Q

T-account

A

an account that is often used to analyze financial transactions; T-accounts are named as such because they resemble the letter T

18
Q

trial balance

A

a list of each account and its net balance

19
Q

balance sheet (statement of financial position)

A

a financial statement that summarizes a company’s financial position at a specific point in time

20
Q

current assets

A

assets that can or will be converted into cash within the next 12 months

21
Q

liquidity

A

the speed with which an asset can be converted to cash

22
Q

capital assets

A

long-term assets used by a company for more than a year, such as land, buildings, and machinery, also referred to as fixed assets or property, plant, and equipment (PPE)

23
Q

amortization (depreciation)

A

the allocation of an asset’s original cost to the years in which it is expected to produce revenues

24
Q

intangible assets

A

long-term assets with no physical existence, such as patents, copyrights, trademarks, and goodwill

25
Q

goodwill

A

the value that has been paid for a company that exceeds the value of its net tangible assets

26
Q

current liabilities

A

short-term claims that are due within a year of the date of the balance sheet

27
Q

long-term liabilities

A

claims that come due more than one year after the date of the balance sheet

28
Q

retained earnings

A

the amounts left over from profitable operations since the company’s beginning; equal to total profits minus all dividends paid to shareholders

29
Q

income statement (statement of comprehensive income)

A

a financial statement that summarizes a company’s revenues and expenses, and shows its total profit or loss over a period of time. Also known as the statement of comprehensive income, statement of earnings, and the profit and loss statement

30
Q

revenues (also called sales and income)

A

the dollar amount of a company’s sales plus any other income it received from sources such as interest, dividends, and rents

31
Q

gross sales

A

the total dollar amount of a company’s sales

32
Q

net sales

A

the amount left after deducting sales discounts and returns and allowances from gross sales

33
Q

expenses

A

the costs of generating revenues

34
Q

cost of goods sold (COGS)

A

the total expense of buying or producing a company’s goods or services

35
Q

gross profit

A

the amount a company earns after paying to produce or buy its products but before deducting operating expenses

36
Q

operating expenses

A

the expenses of running a business that are not directly related to producing or buying its products

37
Q

net profit (net income)

A

the amount obtained by subtracting all of a company’s expenses from its revenues, when the revenues are more than the expenses

38
Q

net loss

A

the amount obtained by subtracting all of a company’s expenses from its revenues, when the expenses are more than the revenues

39
Q

statement of cash flows

A

a financial statement that provides a summary of the money flowing into and out of a company during a certain period, typically one year

40
Q

ratio analysis

A

the calculation and interpretation of financial ratios using data taken from the company’s financial statements to assess its condition and performance

41
Q

liquidity ratios

A

ratios that measure a company’s ability to pay its short-term debts as they come due

42
Q

current ratio

A

the ratio of total current assets to total current liabilities; used to measure a company’s liquidity

43
Q

acid-test (quick) ratio

A

the ratio of total current assets excluding inventory to total current liabilities; used to measure a company’s liquidity

44
Q

net working capital

A

the amount obtained by subtracting total current liabilities from total current assets; used to measure a company’s liquidity

45
Q

profitability ratios

A

ratios that measure how well a company is using its resources to generate profit and how efficiently it is being managed

46
Q

net profit margin

A

the ratio of net profit to net sales; also called return on sales. It measures the percentage of each sales dollar remaining after all expenses, including taxes have been deducted

47
Q

return on equity (ROE)

A

the ratio of net profit to total owners’ equity; measures the return that owners receive on their investment in the company

48
Q

earnings per share (EPS)

A

the ratio of net profit to the number common shares outstanding; measures the number of dollars earned by each share

49
Q

activity ratios

A

ratios that measure how well a company uses its assets

50
Q

inventory turnover ratio

A

the ratio of costs of goods sold to average inventory; measures the speed with which inventory moves through a company and is turned into sales

51
Q

debt ratios

A

ratios that measure the degree and effect of a company’s use of borrowed funds (debt) to finance its operations

52
Q

debt-to-equity ratio

A

the ratio of total liabilities to owners’ equity; measures the relationship between the amount of debt financing and the amount of equity financing (owners’ funds)