A
comprehensive information system for collecting, analyzing, and
communicating financial information.
The recording
of accounting transactions.
An organized
means by which accounting information about o company's
activities is identified measured, recorded, and retained so
that it can be used in accounting statements and management
reports.
The person in
charge of all a firm's accounting activities; the firm's chief
accounting officer.
An accountant
licensed by the state who offers his or her services to the
public.
A systematic
examination of a company's accounting system to determine
whether the company's financial reports fairly present its
operations.
The generally
accepted rules and methods used by accountants in preparing
financial reports.
Specialized
services offered by accountants to help managers resolve a
variety of business problems.
Accountants
who are hired by businesses as salaried employees and who are
responsible for carrying out the firm day&-to&-day
accounting activities.
An accountant
who specializes in management accounting, has met certain
educational and professional standards, and has passed the
examination given by the Institute of Management Accounting.
A
chronological record of a firm's financial transactions along
with a brief description of each transaction.
A record of
all the transactions entered in a firm's journal by category.
Ledgers allow managers to keep track of the balance in each
category (cash, sales, purchases, etc.).
The 12&-month
period used by a firm for annual financial reporting purposes.
Anything of
economic value owned by a firm or an individual.
A debt owed by
a firm or an individual.
The amount of
money a firm's owners would receive if they sold all the
company's assets and paid off all its liabilities.
A bookkeeping
system that requires all transactions to be recorded in two
ways, with one entry showing how the transaction affects assets
and the other entry showing how the transaction affects
liabilities and owners' equity.
In
bookkeeping, an increase in assets or a decrease in liabilities
and owners' equity always entered in the left column of a
journal or ledger.
In
bookkeeping, a decrease in assets or an increase in liabilities
and owners' equity always entered in the right column of a
journal or ledger.
Any of three
broad types of reports (balance sheets, income statements, and
statements of cash flows) regarding a company's financial
status. Used by managers to make informed decisions.
A financial
statement that summarizes a firm's financial position by listing
its assets, liabilities, and owners' equity.
Assets that
can or will be converted into cash in the following year.
The ease with
which an asset can be converted into cash.
Assets, such
as government securities and money market certificates that can
be converted into cash quickly if necessary.
Amounts due
from customers who have purchased goods on credit.
The cost of
merchandise that has been acquired for sale to customers and is
still on hand.
(last&-in&-first&-out)
method A method of valuing inventories that assumes that
inventories received most recently (last in) are sold first.
(first&-in&-first
out) method A method of valuing inventories that assumes that
older inventories (first in) are sold first.
Expenses for
coming periods that are paid before those periods; examples are
supplies on hand and prepaid rent.
Assets that
have long&-term use or value, such as land, buildings, and
equipment.
The process of
distributing the cost of a major asset over the life of the
asset.
Nonphysical
assets such as patents trademarks, and copyrights that have
economic value but whose precise value is difficult to
calculate.
Debts that
must be repaid within the year.
Unpaid bills
to suppliers.
Debts that are
not due until more than one year hence.
Additional
money, over and above the proceeds from the sale of stock paid
directly into the firm by its owners.
A company's
net profits less its dividend payments to stockholders; the
amount retained by the company for use by the company.
A financial
statement that lists a firm annual revenues and expenses and
whose"bottom line" shows the firm annual profit or
loss.
The funds that
flow into a business from selling its products or services.
The total cost
of obtaining the materials used to make the products sold by a
firm during the year.
A firm's
revenues (net sales) minus its cost of goods sold.
The costs&-other
than the cost of goods sold&-incurred by a firm in
producing its product or service. Often broken down into selling
expenses and general/administrative expenses.
A firm's gross
profit minus its operating expenses.
A firm gross
profit minus its operating expenses and income taxes.
A financial
statement that describes the sources and uses of a firm's cash
during the year. Liquidity Ratios: Measures of a firm's ability
to pay its immediate debts.
A firm's
current assets divided by its current liabilities. Used to
determine a firm's credit worthiness.
The difference
between a firm current assets and its current liabilities.
A company's
quick assets divided by its current liabilities. Used to
determine a firm's ability to meet emergency demands for cash.
Cash plus
assets one step removed from cash (marketable securities and
accounts receivable).
Measures of a
firm's ability to meet its long&-term debts.
A firm's total
debt divided by total owners' equity. Used to determine the
extent to which a firm is financed through borrowing.
The process of
using borrowed funds to make purchases.
Measures of a
firm's overall financial performance in terms of profits
A firm's net
income divided by its total sales. Used to determine the
percentage of a firm's income that is profit.
A firm's net
income divided by total owners' equity. Used to determine how
much net income the business earns for each dollar invested by
the firm's owners.
A firm's net
income divided by the total number of common shares outstanding.
Used to determine how large a dividend a firm can pay its
shareholders.
Measures of
how efficiently a firm uses its resources.
A firm total
cost of goods sold divided by its average inventory. Used to
determine the average number of times inventory is sold and
restocked during the year.
A detailed
statement of a firm's estimated receipts and expenditures for a
period of time in the future, usually one year.
