Chapter 16 Understanding Accounting and Financial Information Flashcards Preview

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Flashcards in Chapter 16 Understanding Accounting and Financial Information Deck (39):
1

Managerial Accounting

Accounting used to provide information and analyses to managers inside the organization to assist them in decision making

2

Financial Accounting

Accounting information and analyses prepared for people outside the organization

3

Annual Report

A yearly statement of financial condition, progress and expectations of an organization

4

Compliance

The job of reviewing and evaluating the records used to prepare a companies financial statements

5

Independent Audit

An evaluation and unbiased opinion about the accuracy of a companies financial statements

6

Forensic Accounting

A relatively new area of accounting that focuses its attention on fraudulent activity

7

Tax Accounting

An accountant trained in tax law and responsible for preparing tax returns or developing tax strategies

8

Private Accountant

An accountant who works for a single firm, government agency or non-profit organization

9

Public Accountant

An accountant who provides his or her accounting services to individuals or businesses on a fee basis

10

Chartered Accountant

An accountant who has met the examination, education, and experience requirements of the society of management accountants of canada

11

Certified Management Accountant

An accountant who has met the examination, education and experience requirements of the society of management accountants of canada

12

Accounting

The recording, classifying, summarizing and interpreting of financial events to provide management and other interested parties the financial information they needs to make good decisions

13

Accounting Cycle

A six-step procedure that results in the preparation and analysis of the major financial statements

14

Bookkeeping

The recording of business transactions

15

Journal

The record book where accounting data is first entered

16

Double-entry Bookkeeping

The concept of every business transaction affecting at least 2 accounts

17

Fundamental Accounting Equation

Assets are equal to liabilities pus owners equity; this is the basis for the balance sheet

18

Ledger

A specialized accounting book in which information from accounting journals is accumulated into accounts and posted so that managers can find all of the information about a specific account in one place

19

Trial Balance

A summary of all the data in the account ledgers to show whether the figures are correct and balanced

20

Financial Statement

A summary of all of the transactions that have occured over a particular period

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Balance Sheet

The financial statement that reports a firms financial condition at a specific time and is composed of 3 major types of accounts: assets, liabilities and owners equity

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Assets

Economic resources owned by a firm

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Liquidity

How fast an asset can be converted into cash

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Current Assets

Items that can be converted into cash within one year

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Capital Assets

Assets that are relatively permanent, such as land, buildings or equipment

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Intangible Assets

Long term assets that have no real physical form but do have value

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Liabilities

What the business owes to others

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Accounts Payable

Current Liabilities are bills a company owes to others for merchandise or services purchased on credit but not paid for yet

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Notes Payable

Short term or long term liabilities that a business promises to repay by a certain date

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Bonds Payable

Long term liabilities that represent money lent to a firm that must be paid back

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Taxes Payable

Sales taxes and GST or HST collected and income tax payable

32

Owners Equity

The amount of the business that belongs to the owners minus any liabilities owned by the business

33

Retained Earnings

The accumulated earnings from a firms profitable operations that remains in the business and not paid out to shareholders or dividends

34

Net income

Revenue left over after all costs and expenses, including taxes, are paid

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Gross Profit

How much a firm earned by buying and selling merchandise

36

Operating Expenses

Costs involved in operating a business, such as rent, utilities and salaries

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Cash Flow

The difference between cash coming in and cash going out of a business

38

Amortization

The systematic write off of the cost of a tangible asset over its estimated useful life

39

Matching Principle

Revenues are recorded with earned and expenses are recorded when incurred