G-H-I Accounting Definitions Flashcards
(100 cards)
<p>Gains</p>
<p>Increases in equity as a result of transactions that are not part of the company's main or central operations and that do not result from revenues or investments by the owners of the entity. (HOCK)</p>
<p>General Systems Controls</p>
<p>Relate to the general environment within which transaction processing takes place. They are designed to ensure that the company's control environment is stable and well managed. (HOCK)</p>
<p>Generalized Audit Software</p>
<p>Software that permits the computer to be used by auditors as an auditing tool. The computer can select, extract, and process sample data from computer files. (HOCK)</p>
<p>Generally Accepted Accounting Principles (GAAP)</p>
<p>The body of accounting rules, methods, and procedures endorsed by the accounting profession, either by convention or by authoritative literature, as a guide to the preparation of financial statements. (IMA)</p>
<p>Geographical Pricing</p>
<p>Product and service pricing based on the marketplace in which it is provided. (IMA)</p>
<p>Goal</p>
<p>What is intended to be accomplished at the unit or departmental level. Goals are similar to objectives, but goals are created for smaller units within the organization. (HOCK)</p>
<p>Goal Congruence</p>
<p>A characteristic of a management control system that is structured so that the goals of individuals are consistent with the goals of the organization. (IMA)</p>
<p>Going Concern</p>
<p>The assumption that, in the absence of evidence to the contrary, a firm will continue to exist indefinitely. (IMA)</p>
<p>Goodwill</p>
<p>The excess of the fair market value an entity above its identifiable net assets. (IMA)</p>
<p>Gross Profit Margin</p>
<p>Net sales less cost of sales. (Also called Gross Profit.) (IMA)</p>
<p>Gross Profit Margin Percentage</p>
<p>Gross profit divided by sales. (IMA)</p>
<p>Gross Revenue</p>
<p>Total unadjusted revenue. (Also called Gross Sales.) (IMA)</p>
<p>Growth Stage</p>
<p>The third stage in the life cycle of a product. If the introduction stage is successful, the product will experience rapid sales growth and increasing profits in the growth stage. (HOCK)</p>
<p>Hardware</p>
<p>The physical components of a computer system. (IMA)</p>
<p>Hardware Controls For Networks</p>
<p>Controls that are required for networks because of the fact that the hardware is located in many different locations. (HOCK)</p>
<p>Hash Totals</p>
<p>Totals of nonmonetary information. A hash total can be run on a group of records to be input before processing or transmission and again after processing. (HOCK)</p>
<p>Hazard Risk</p>
<p>The risk within a situation that has the potential for harm to humans, property and damage of environment or a combination of these. (IMA)</p>
<p>Hearsay Evidence</p>
<p>A secondhand account where the witness does not have personal, direct knowledge of what occurred but heard it from someone else. (HOCK)</p>
<p>Hedging</p>
<p>A method of reducing exposures to fluctuations in prices, exchange rates, or interest rates. (IMA)</p>
<p>Held-to-Maturity Securities</p>
<p>Securities that are held with the intent to hold to maturity. Only debt can be classified as held-to-maturity, since only debt has a maturity date.</p>
<p>High-low method</p>
<p>Method of estimating cost behavior by using only the highest and lowest values of the cost driver within the relevant range. (IMA)</p>
<p>High-Low Pricing</p>
<p>A pricing strategy that involves charging high everyday prices but offering frequent discounts and sales. But constant sales and promotions increase costs and erode consumer confidence in the everyday prices. (HOCK)</p>
<p>Historical Cost</p>
<p>The amount originally paid for an asset, unadjusted for subsequent changes in value. (Also called Acquisition Cost or Original Cost.) (IMA)</p>
<p>Holding Gain or Loss</p>
<p>Unrealized gains or losses from holding assets or liabilities during a period of changing prices. (IMA)</p>
Honesty
Fairness and straightforwardness of conduct. It is the quality of being upright, having integrity, truthfulness, sincerity, frankness, and freedom from deceit or fraud. (HOCK)
Horizontal Analysis
Compares each amount on a financial statement with a base amount for a selected base year. (Also called Common Base Year Statements.) (IMA)
Horizontal Merger
A merger that takes place between or among firms in the same line of business. (HOCK)
Hot Site
A backup facility that has a computer system similar to the one used regularly. The hot site must be fully operational and immediately available, with all necessary telecommunications hookups for online processing. (HOCK)
Hurdle Rate
The minimum acceptable rate of return that companies will consider from a prospective project or investment. (Also called Required Rate of Return.) (IMA)
Hybrid Cost System
A cost system having characteristics of both Job Costing and Process Costing systems. (IMA)
Ideal Capacity
The level of activity that will occur if the company produces at its absolute most efficient level at all times. (This means no allowances for idle time and downtime and no decrease in sales demand). A company will not be able to achieve this level in the long run. (HOCK)
Ideal Costs
The level of costs that would be attainable only under the best possible conditions. (HOCK)
IMA Statement of Ethical Professional Practice
A commitment to ethical professional practice made by members of the Institute of Management Accountants (IMA) that includes standards that guide the conduct of members including competence, confidentiality, integrity, and credibility. The statement also includes guidelines for the resolution of ethical conflict. (IMA)
Impaired Asset
An asset whose fair market value is less than the amount listed on the balance sheet. (IMA)
Implicit Costs
Costs recognized in particular situations that are not regularly recognized in the accounting records of an entity. (Also called Imputed Costs.) (IMA)
Implicit Interest Rate
Rate that would have resulted from two independent parties negotiating an interest rate. (Also called Imputed Interest Rate.) (IMA)
Imposed Budget
A budget that is decided by higher level management without the participation of the manager of the unit to whom that budget relates. (Also called Top-Down Budget.) (IMA)
Imputed Cost
A cost that does not show up in the accounting records and is not a cash outlay, but it represents a cost that must be considered in decision-making. An opportunity cost is a type of imputed cost. (HOCK)
Imputed Costs
A cost that does not exist but is needed for use in a decision-making process. Interest or a cost of capital is often an imputed cost. (HOCK)
In-The-Money
When the exercise price of the option is favorable to the holder of the option, the option is in-the-money because the option has immediate value due to the difference between the option price and the market price. (HOCK)
Income Statement
A financial statement that reports the results of operations for a period of time. By presenting revenues, expenses, gains, losses, and net income, it measures a company's success over a time period. (Also called Statement of Earnings.) (IMA)
Income Tax
An annual tax levied by a government on the financial income of an entity. (IMA)
Incorporated (Inc.)
A company formed into a legal corporation. (IMA)
Incremental
The difference in cash flow, both as to amount and as to timing, between two alternative courses of action. (IMA)
Incremental Analysis
A method of analyzing managerial decisions that emphasizes incremental rather than the total costs and benefits associated with an action (or set of alternative actions). (Also called Marginal Analysis or Differential Analysis.) (IMA)
Incremental Cost-Allocation Method
This method ranks the users of a cost object according to their total usage or on some other basis. The first-ranked user of the activity is called the primary user and they are charged for costs up to what its cost would be if it were the only user. Then, the next-ranked user(s) are called the incremental users and are allocated the additional cost, proportionately if more than one. (HOCK)
Incremental Costs
Costs that are incurred additionally as a result of an activity or decision. (HOCK)
Incremental Unit-Time Learning Model
A learning curve model in which the incremental unit time (the time needed to produce the last unit) declines by a constant percentage each time the cumulative quantity of units produced is doubled. (IMA)
Indenture
A written agreement (also called a deed of trust) between a debt issuer and a purchaser, stating the maturity date, interest rate and other terms. (IMA)
Independent Auditor
An external auditor who has no financial or other interest in the client whose financial statements are being examined. (IMA)
Independent Directors
Directors of the company who are not employed by the company itself . (HOCK)
Independent Variable
A variable (often denoted by x) whose variation does not depend on that of another. (HOCK)
Indirect Cost
Any cost not directly identified with a single final cost object, but identified with two or more final cost objects or with at least one intermediate cost object. All costs other than direct materials and direct labor. (Also called Overhead Cost or Burden.) (IMA)
Indirect Labor
Salaries and wages not directly attributable to a specific product or job, such as plant superintendent, janitorial services and quality control. (HOCK)
Indirect Materials
Materials not identifiable with a specific product or job, such as cleaning supplies, small or disposable tools, machine lubricant and other supplies. (HOCK)
Indirect Method
A method of preparing the Cash Flow Statement where net cash flow from operating activities is determined by adding back to or deducting from net income those items that had no effect on cash. (IMA)
Industry Risk
Risks companies face by virtue of the industry they are in. (IMA)
Inelastic
The demand for a product that is inelastic is not very sensitive to changes in prices as a change in price of a certain percentage will result in a change in demand of a smaller percentage. (HOCK)
Inflation
A rise in the general level of prices of goods and services. (IMA)
Information And Communication
The process of collecting and distributing information in a company so that individuals are able to fulfill their duties. (HOCK)
Information System
A system consisting of people, computers, voice and data communications, and methods organized to accomplish data and information operations. Information systems support the running of the enterprise's business. (IMA)
Information Technology (IT)
IT deals with the use of electronic hardware and software to convert, store, protect process, transmit, and retrieve information. (IMA)
Inherent Risk
1. The risk related to the very nature of the activities the company undertakes in the course of business. 2. The auditor's assessment of the likelihood that there are material misstatements in the financial statements before considering the effectiveness of internal controls. (IMA)
Initial Public Offering (IPO)
A company's first public issue of common stock. (IMA)
Input Controls
Controls that ensure the complete and accurate recording of authorized transactions by authorized users and identify rejected and duplicate items. (IMA)
Insider Trading
The buying and selling of a corporation's stock by individuals with access to non-public information. (IMA)
Installment Sale
An arrangement where the buyer takes possession of the property immediately but does not receive the deed and title until a series of payments have been made. (IMA)
Insurance
A form of risk management used to hedge against the risk of a contingent, uncertain loss; the transfer of the risk of a loss from one entity to another, in exchange for payment. (IMA)
Intangible
A type of non-current asset that has no physical substance and whose value comes from rights or advantages conferred upon the owner. Examples are patents, copyrights, trademarks, brand names, licenses, and goodwill. (IMA)
Integrated Test Facility
The use of test data and also the creation of test entities that do not really exist, such as vendors, employees, products, or customers. The fictitious entities are actually included in the system's master files, and the test data are processed concurrently with real transactions. The auditor can check to see if the incorrect data is properly identified and excluded by the system. (HOCK)
Integrity
An ethical standard in IMA's Statement of Ethical Professional Practice that requires members to avoid conflicts of interest and refrain from activities that would discredit the profession. (IMA)
Interest
The cost incurred or amount earned for the use of borrowed capital. (IMA)
Interest Rate Risk
The risk that the value of the investment will change over time as a result of changes in the market rate of interest. (HOCK)
Interest Rate Swaps
Contracts between two parties that agree to trade payment streams, specifically interest payments on debts. The most common form involves one payment at a fixed rate and one at a floating (or variable) rate that is pegged to some sort of market rate of interest and changes whenever the market rate changes. (HOCK)
Interest-Bearing
A debt instrument that includes a provision that interest be paid. (IMA)
Interim Financial Reports
Financial statements prepared for periods shorter than one year, such as monthly or quarterly. (IMA)
Interim Reports
Reports that are issued during the process of the audit engagement. (HOCK)
Internal Auditing
An appraisal activity within an entity that measures and reports on the extent to which various organizational policies are followed and goals are met. (IMA)
Internal Control
Controls established by management to ensure adherence to management policies, safeguarding of assets, and completeness and accuracy of records. (IMA)
Internal Control Risk
The risk that internal controls are not effective, because of either inadequate set-up and design or lax execution. (IMA)
Internal Factors
In strategic planning, an analysis of the internal strengths and weaknesses of an entity. (IMA)
Internal Failure Costs
Costs incurred when an entity detects nonconforming products or services before delivering them to customers. Examples include scrap, rework and retesting. (IMA)
Internal Funds
Sources of finance that are available from profits that the company generates but decides not to distribute to the owners. (HOCK)
Internal Rate of Return (IRR)
The discount rate that equates the net present value of a stream of cash outflows and inflows to zero. (IMA)
International Accounting Standards Board (IASB)
An independent, privately-funded accounting standard-setter based in London, UK, with board members from nine countries, committed to developing a single set of high-quality, understandable and enforceable global financial accounting standards
International Bonds
Bonds that are sold outside of the issuing company's home country. (HOCK)
Internet
The worldwide collection of interconnected networks that use the Internet suite of protocols and permit public access. (IMA)
Intranet
A private network that integrates Internet standards and applications within an organization's existing computer networking infrastructure. (IMA)
Intrinsic Value
The amount by which the option is in-the-money at any point in time. (HOCK)
Introduction Stage
The second stage in the life cycle of a product, the introduction stage is typically one of slow growth and minimal profits, because of the heavy upfront expenses to introduce a new product. (HOCK)
Inventoriable Costs
Costs that go directly into the production process, without which the product could not be made. Product costs are "transferred" to each unit and will be carried on the balance sheet as inventory when production is completed. (also called product costs). (HOCK)
Inventory
The actual raw materials, supplies, goods on hand, goods in process of manufacture, and goods in transit, in storage, or consigned to others, or the act of accounting for, listing and pricing inventory. (IMA)
Inventory Turnover
A ratio that measures the number of times a firm's average inventory is sold during a year. (IMA)
Inventory Valuation
The measurement of the cost assigned to items in inventory. (IMA)
Invested Capital
The amount of capital contributed to a business by equity investors, either directly or through the retention of earnings. (IMA)
Investing Activities
Those activities that the company undertakes to generate a future profit, or return. (HOCK)
Investment
Expenditure to acquire property or other assets in order to produce income; also, the asset so acquired. (IMA)
Investment Center
A responsibility center whose performance is measured in the amount of income it earns relative to the investment in its assets. (IMA)
Investment Grade
The rating given to the debt of companies that have a high capacity to repay and there is little risk of default. (HOCK)
