g2 Flashcards
(129 cards)
1
Q
Is the art or recording, classifying, summarizing, systematically, in terms of money, transactions, and events, which are parts at least, of a financial character and interpreting the results, thereof.
A
ACCOUNTING –
2
Q
Involves the preparation of business documents, and commits the transactions and events into writing.
A
RECORDING –
3
Q
Is the sorting of the many transactions in an orderly and systematic manner.
A
CLASSIFYING –
4
Q
Takes the form of accounting reports prepared by the accountant for the management and the owners of the business.
A
SUMMARIZING –
5
Q
Involves the analysis of the accounting statement such as percentages and ratios, to determine how the business is performing compared to prior years and other similar businesses.
A
INTERPRETING –
6
Q
Are things of value owned by the business.
A
ASSETS –
7
Q
Any medium of exchange that the bank will accept at face value. Includes coins and currencies, checks, money order, bank drafts, and bank deposits.
A
CASH –
8
Q
Are claims against debtors or customers arising from the sale of merchandise or services on account.
A
ACCOUNTS RECEIVABLE –
9
Q
– Are claims against debtors evidenced by a written promise to pay.
A
NOTES RECEIVABLE
10
Q
Are goods held for sale.
A
MERCHANDISE INVENTORIES –
11
Q
Are goods used in the operations of the business. They are normally classified as office supplies and store supplies.
A
SUPPLIES –
12
Q
– Are expenses paid in advance, like rent, insurance, and taxes.
A
PREPAID EXPENSES –
13
Q
Include typewriter, electric fan, air conditioner, telephone, switchboard, computers, and the like
A
EQUIPMENT –
14
Q
Are made mostly of wood like desks, chairs, conference tables, and build-in cabinets.
A
FURNITURE AND FIXTURES –
15
Q
Are the equities of the creditors, or the debts of the business. It includes account that end mostly with the term “payable” such as:
A
LIABILITIES –
16
Q
– Are amounts due to creditors arising from the purchase of merchandise or services on account.
A
ACCOUNTS PAYABLE
17
Q
Are amounts due to creditors evidenced by a written promise to pay.
A
NOTES PAYABLE -
18
Q
Are unpaid salaries due to the employees.
A
SALARIES PAYABLE –
19
Q
Are unpaid taxes due to the government.
A
TAXES PAYABLE –
20
Q
Is interest on money borrowed incurred but not yet paid at the end of the period.
A
INTEREST PAYABLE –
21
Q
– Are long-term debts secured by collateral.
A
MORTGAGE PAYABLE
22
Q
Represents the equity of the owner, or the right of the owner on the assets of the business.
A
CAPITAL
23
Q
. Is the inflow of assets resulting from the sale of goods or rendering of services to customers.
A
REVENUE OR INCOME –
24
Q
Are costs incurred to produce revenue.
A
EXPENSES –
25
Includes all payments made to employees or workers for rendering services to the company
SALARIES OR WAGES EXPENSE
26
Is an expense related to the use of electricity, fuel, water and telecommunication facilities.
UTILITIES EXPENSE
27
Is the expired portion of premiums paid on insurance coverage such as premiums paid for health or life insurance, motor vehicles or other properties.
INSURANCE EXPENSE
27
Covers office supplies used by the business in the conduct of its daily operations.
SUPPLIES EXPENSE
28
Is the annual portion of the cost of a tangible asset such as buildings, machineries, and equipment charged as expense for the year.
DEPRECIATION EXPENSE
28
Means the amount of receivables charged as expense for the period because they are estimated to be doubtful of collection.
UNCOLLECTIBLE ACCOUNTS EXPENSE/DOUBTFUL ACCOUNTS EXPENSE/BAD DEBTS EXPENSE
29
Is the amount of money charged to the borrower for the use of borrowed funds.
INTEREST EXPENSE
30
Is a form used for recording increases and decreases in each individual asset, liabilities, capital, revenue and expense.
ACCOUNT
31
Derives its name from the fact that it looks as a capital letter T. We write the title or name of an account, like Cash, on top of the T. We record the increases on the item on one side, while we record the decreases on the opposite side.
T-ACCOUNT
32
A debit entry is an entry on the left side, while a credit entry is an entry on the right side. The accountant would say “debit” instead of saying “place an entry on the left side of the T account” and “credit” for “place an entry on the right side of the T-account.
DEBITS AND CREDITS
33
This procedure keeps the accounting equations in balance.
DOUBLE-ENTRY BOOKKEEPING
34
The procedure whereby we obtain the balance of any T-account by totaling the debits and credits to the account, and subtracting the smaller sum from the larger.
PENCIL FOOTING
35
Increase in Assets Decrease in Assets
Decrease in Liabilities Increase in Liabilities
Decrease in Capital Increase in Capital
Increase in Drawing Decrease in Drawing
Decrease in Revenue Increase in Revenue
Increase in Expenses Decrease in Expenses
RULES OF DEBIT AND CREDIT SUMMARIZED
DEBITS CREDITS
36
A permanent chronological record of business transactions.
JOURNAL
37
Shows all of the effects of a transaction as expressed in terms of debit and credit and may include an explanation of the transaction.
JOURNAL ENTRY
38
Is the process of entering a transaction in the journal.
JOURNALIZING
39
Is the complete collection of all the accounts of a company
LEDGER (GENERAL LEDGER)
40
A complete listing of the account titles and account numbers of all the accounts in the ledger.
CHART OF ACCOUNTS
41
Is recording in the ledger the information contained in the journal. If an item appears as a debit in the journal,
POSTING
42
Is the placing of the account number of the ledger account in the general journal and the general journal page number in the ledger account.
CR0SS-INDEXING
43
An entry with one debit and one credit.
SIMPLE JOURNAL ENTRY
44
The journal entry for this transaction will involve more than one debit and/or credit. Ex. Jan 15, Ms. Cortez paid cash for taxes of P1,750 and miscellaneous expenses of 850.
COMPOUND JOURNAL ENTRY
45
A list of the accounts with debit or credit balance to determine that debit equals credits in the recording process.
TRIAL BALANCE
46
Is the art of recording, classifying and summarizing transactions and events which are, in part, of a financial character and interpreting the results.
ACCOUNTING
47
the reader is able to learn the firm’s revenues and expenses, and if the firm is earning a profit or incurring a loss. It shows the firm’s profitability which is an indication of stability for the firm.
Income statement
48
the reader is able to know the firm’s assets, liabilities and capital or owner’s equity; he is able to know a firm’s stability, liquidity, and solvency.
Balance sheet
49
shows how the owner’s equity changed. This shows whether the capital has increased or decreased.
Statement of changes in owner’s equity
50
is a statement of the sources and use of the company’s cash/funds. This statement details where the funds came from – owners, creditors, or customers. It also shows where the cash went – payment of operating expenses, payment of liabilities, acquisition of inventory, other assets, and investments.
Cash flow of funds flow statement
51
Is the management of money or the money resource itself.
Finance
52
Includes tangible and intangible resources needed by a company to attain its goal.
Non-human capital
53
include financial assets such as cash and marketable securities that help in maintaining a healthy working capital position. Include real assets of property, plant, and equipment.
Tangible assets
54
Include goodwill, copyrights, trade names and brand among others.
Intangible assets
55
Includes human resources, the employees, including the rank and file employees, the managerial employees, consultants, auditors, among others are utilized by the company to attain its goals and objectives.
Human capital
56
Means additional investment in assets, which, in turn, requires the need for additional capital or funding.
Growth in saleS\s
57
Involves making forecasts of sales and expenses under alternative production and marketing strategies and deciding how to meet the forecasted financing requirements.
Financial planning
58
Deals with the feedback and correction phase that are required to ensure plans are followed or modified to respond to the environment to attain set goals, financially.
Financial control
59
Is the branch of accounting that deals with the recording of business transactions and the preparation of the financial statement. The basic objective of financial accounting is to provide the objective financial information about how the business is performing and how stable the company is.
Financial accounting
60
Is the branch of accounting concerned with providing information to managers, those inside the organization, and those who direct and control the company’ operations.
Managerial accounting
61
Includes information on the costs of products and services, budgets, performance reports, and other information which assists managers in their planning and control activities.
Managerial accounting information
62
Concerned with the efficient and effective allocation, acquisition and use of funds.
Financial management
63
Responsible for forecasting and planning, making major investment and financing decisions, coordination and control, and dealings with the financial markets.
Financial managers
64
Are tools that managers use to help them in their decision-making considering financial implications.
Financial statements
65
Now called a statement of comprehensive income, details the revenues earned and the expenses incurred by a company. It shows the results of the operation of a company. It covers a certain accounting period, a month, a quarter, a six-month period, or a year.
INCOME STATEMENT
66
Are the cost of direct materials, direct labor, and overhead, also called manufacturing cost.
PRODUCT COSTS
67
Are variable costs or costs that change in volume. Means that the more products are produced (volume), the greater or higher the cost of direct materials and direct labor is, because they are directly incorporated into the product.
Direct materials & Direct labor
68
Are materials directly incorporated into the product like lumber for furniture, leather for shoes and bags, and cloth for clothing (dress, pants, shirt).
1 Direct materials
69
Covers the wages paid to all direct workers. These workers handle jobs such as sewing for shoes
2 Direct labor
70
Covers all manufacturing costs other than direct materials and direct labor. Includes;
Overhead (manufacturing/factory overhead)
71
Means a change in volume.
1 VARIABLE
72
Means Remains constant irrespective of volume.
2 FIXED
73
Refer to costs incurred during a particular time period and reported either as selling or marketing expenses, and administrative or general expenses. Part of period costs are the taxes paid to the government including income tax for the period.
PERIOD COSTS
74
A corporate expense that changes in proportion to how much a company produces or sells, they vary depending on the profit of the business. Salesmen’s commissions and bonuses, utilities expenses, communication expenses, transportation expenses, among others are all variable.
Variable costs
75
Expenses that a company must pay regardless of the level of goods or services produced or sold. Include rent for office building, depreciation expense for the office building and office equipment and furniture and salaries of the office managers and staff.
Fixed costs
76
Also called statement of financial position shows the assets, liabilities and owner's equity of a business. It shows the financial condition or financial position of the business.
BALANCE SHEET OR THE STATEMENT O FINANCIAL CONDITION
77
refers to a firm’s ability to meet its maturing obligations in the short run.
Liquidity
78
refers to the firm’s ability to meet maturing obligations in the long run.
Solvency
79
the resources that will be used for current operations or within the current operating cycle.
Current assets
80
refers to the resources of the firm that are durable or will last longer than a year like land, building, equipment, furniture and fixtures, and long-term investments.
Non-current assets
81
are obligations of the firm that will mature or need payment during the current accounting period or accounting year.
Current Liabilities
82
are the obligations of the firm that will mature or become due within more than a year.
Non-current Liabilities or Long-term Liabilities
83
where assets are listed on the left side and liabilities and owners’ equity on the right side. It is like a T-account used in accounting.
Account form
84
lists the assets followed by the liabilities and the owner(s)’ equity
Report form
85
Details the changes that occurred in the owner(s)’ equity.
STATEMENT OF CHANGES IN OWNERS’ EQUITY
86
Details the beginning retained earnings, the profit/loss of the corporation, dividends declared, retained earnings appropriated, and return of appropriation.
RETAINED EARNINGS ACCOUNT
87
Are the appropriation of the company’s accumulated earnings for such purposes as plant expansion, building construction, land acquisition, bond retirement, and other purposes as the corporation sees fit.
RETAINED EARNINGS APPROPRIATED
88
sometimes called the funds flow statement or the statement of the sources and uses of cash or the statement of sources and uses of funds - it can be a simple statement of cash receipts and cash disbursements as is done in very small business
CASH FLOW STATEMENT
89
Where recognition of income and expenses are made when income is earned, regardless when cash is received, and expenses are recognized when expenses are incurred, irrespective of when they are paid.
ACCRUAL METHOD OF ACCOUNTING
90
shows purchases and sales of fixed assets.
Net cash inflow from investing activities
91
shows sales of capital stock, payment of dividends, and repayment of long-term liabilities.
Net cash inflow from financing activities
92
reflects the amount of cash the company has on hand after operating expenses are deducted from total sales.
Net cash inflow from operating activities
93
involve all activities related to non-current assets – disposing of them or selling them and buying them.
Investing activities
94
involve obtaining resources from owners (issuances of capital stock) and paying them dividends as their share in the profit of the company. They also include obtaining resources from creditors and repaying the amounts borrowed.
Financing activities
95
are all operation-related earning activities of the company – rendering service for a service firm, selling goods for a trading concern, and manufacturing and selling activities for a manufacturing company.
Operating activities
96
in which documentation is made available to the public from a third party.
EXTERNAL INFORMATION
97
consists of data created for the sole use of the company that produces it, such as personnel files, trade secrets, and minutes of board meetings.
INTERNAL INFORMATION
98
Are hard copies of resources, like physical books and newspapers.
PRINT INFORMATION OR PRINT RESOURCES
99
This source of business information is perhaps the least helpful of the various external sources available to small business owners.
TELEVISION AND RADIO MEDIA
100
"Large online systems can help overcome the incredible fragmentation of published information.
ONLINE INFORMATION
101
is a popular alternative to online services. As the name implies, CD-ROM is not so much an interactive system; in usage it is close to traditional print.
CD-ROM INFORMATION CD-ROM (compact disc read only memory)
102
Is studying the external factors that affect a business.
BUSINESS ENVIRONMENTAL ANALYSIS
103
are factors within a company that affect growth and profitability. As something the business can control, it can be changed to produce the desired results.
INTERNAL ENVIRONMENT
104
is composed of forces around the business that affect growth and profitability. Businesses can’t control them and therefore can’t change them.
EXTERNAL ENVIRONMENT
105
This directly impacts your organization’s daily operations. They are your distributors, competitors, consumers and the general public.
MICRO ENVIRONMENT
106
impact your organizations decisions. They are political, economic, social and technological spheres.
MACRO ENVIRONMENT
107
* is effective because it gives businesses the bigger picture of their environment. It identifies the key environmental elements that impact business decisions, unlike the SWOT analysis.
PESTLE MODEL OF BUSINESS ENVIRONMENT ANALYSIS
108
involves factors related to government action. There are two underlying factors to consider when conducting a business environment scan of political influences – overall government stability and the degree to which the government intervenes in the economy.
POLITICAL
109
impact business growth directly. Include inflation, foreign exchange, income per capita, GDP and unemployment rates. These affect consumers’ buying power.
ECONOMIC
110
consists of societal values, traditions, attitudes and behaviors. Every country has distinct socio-cultural norms, which influence the production, sale or advertising of goods and services.
SOCIAL
111
entails the use of machines and software to improve modes of production and product quality.
TECHNOLOGICAL
112
refers to national laws, government policy, and industry regulations that affect how businesses work.
LEGAL
113
ecological environment refers to the physical world, such as climate, water bodies, land masses and animals
ENVIRONMENTAL
114
To understand your company’s financial status during a specific period, it is imperative to understand your company’s ability to convert sales into profits.
MARGIN RATIOS
115
uses nothing but the company’s ability to generate returns to its shareholders.
RETURN RATIOS
116
This expresses the percentage of revenue that businesses retain as profit.
Gross profit margin
117
reveals how much profit they retain after paying operational expenses but before paying interest and taxes.
Operating profit/Earnings before interest and taxes (EBIT) margin
118
reveals the percentage of revenue retained as profit after paying both operating expenses, taxes, and interest.
Net Profit Margin
119
expresses what percentage of revenue is liquid. All businesses need cash to pay operating expenses, pay dividends to shareholders, and invest in new assets.
Cash Flow Margin
120
measures the percentage of profit earned from a financial investment. ROI can be broadly used for different types of investments, including in stocks, business assets, and other securities.
RETURN ON INVESTMENT (ROI)
121
Informs how much profit a business generates for its shareholders. Investors prioritize this ratio since it tells them what return to expect from an investment.
RETURN ON EQUITY (ROE)
122
measures the percentage of return a business produces from existing assets. A company's ROA indicates the efficiency of its internal resource allocation.
RETURN ON ASSETS (ROA)
123
The accuracy of the analysis depends on the accuracy and genuineness of the financial statements.
Quality of underlying data
124
Financial statement analysis does not take into account the external factors that may affect the company's performance.
Standalone analysis
125
Financial statement analysis is based on past data and assumptions, which may not be accurate in the future
Historical figures + assumptions = projections
126
Financial statements may not be up-to-date or relevant to the current situation.
Timeliness/relevance
127
Financial statement analysis does not take into account qualitative factors such as management quality, employee morale, and brand value.
Qualitative factors
