The process of
systematically collecting, analyzing, and reporting financial
information.
The routine,
day&-to&-day record keeping that is a necessary part
of accounting.
An accountant
who is employed by a specific organization.
An accountant
whose services may be hired on a fee basis by individuals or
firms.
An individual
who has met state requirements for accounting education and
experience and has passed a rigorous three&-day accounting
examination.
The items of
value that a firm owns.
A firm's debts
and obligations&-what it owes to others.
The difference
between a firm's assets and its liabilities&-what would be
left over for the firm's owners if its assets were used to pay
off its liabilities.
The basis for
the accounting process: Assets = liabilities + owners equity.
A system in
which each financial transaction is recorded as two separate
accounting entries to maintain the balance shown in the
accounting equation.
A book of
original entry in which typical transactions are recorded in
order of their occurrence.
A book of
accounts that contains a separate sheet or section for each
account.
The process of
transferring journal entries to the general ledger.
A summary of
the balances of all general ledger accounts at the end of the
accounting period.
A summary of a
firm's assets, liabilities, and owners' equity accounts at a
particular time, showing the various dollar amounts that enter
into the accounting equation.
The ease with
which an asset can be converted into cash.
Cash and other
assets that can be quickly converted into cash or that will be
used in one year or less.
Assets that
have been paid for in advance but not yet used.
Assets that
will be held or used for a period longer than one year.
The process of apportioning the cost of a fixed asset over the
period during which it will be used.
Assets that do
not exist physically but that have a value based on legal rights
or advantages that they confer on a firm.
The value of a
firm's reputation, location, earning capacity, and other
intangibles that make the business a profitable concern.
Debts that
will be repaid in one year or less.
Short&-term
obligations that arise as a result of making credit purchases.
Obligations
that have been secured with promissory notes.
Debts that
need not be repaid for at least one year.
A summary of a
firm's revenues and expenses during a specified accounting
period.
Dollar amounts
received by a firm.
The total
dollar amount of all goods and services sold during the
accounting period.
The actual
dollar amount received by a firm for the goods and services it
has sold, after adjustment for returns, allowances, and
discounts.
The cost of
the goods a firm has sold during an accounting period; equal to
beginning inventory plus net purchases less ending inventory.
A firm's net
sales less the cost of goods sold.
Those costs
that do not result directly from the purchase or manufacture of
the products a firm sells.
Costs that are
related to the firm's marketing activities.
Costs that are
incurred in managing a business.
The profit
earned (or the loss suffered) by a firm during an accounting
period, after all expenses have been deducted from revenues.
A number that
shows the relationship between two elements of a firm's
financial statements.
A financial
ratio that is calculated by dividing net income after taxes by
net sales.
A financial
ratio that is calculated by dividing net income after taxes by
owners' equity.
A financial
ratio that is calculated by dividing net income after taxes by
the number of shares of common stock outstanding.
The difference
between current assets and current liabilities.
A financial
ratio that is computed by dividing current assets by current
liabilities.
A financial
ratio that is calculated by subtracting inventories from the
current asset amount and dividing the total by current
liabilities.
A financial
ratio that is calculated by dividing net sales by accounts
receivable; measures the number of times a firm collects its
accounts receivable in one year.
A financial
ratio that is calculated by dividing the cost of goods sold in
one year by the average value of the inventory; measures the
number of times the firm sells and replaces its merchandise
inventory in one year.
A financial
ratio that is calculated by dividing total liabilities by total
assets; indicates the extent to which the firm's borrowing is
backed by its assets.
A financial
ratio that is calculated by dividing total liabilities by
owners' equity; compares the amount of financing provided by
creditors with the amount provided by owners.
