Business Quizz/Test Chapter 17
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What is accounting?
recording, classifying, summarizing, and interpreting of financial events and transactions to provide management and othe interested parties the information they need to make good decisions.
what is managerial accounting?
accounting used to provide information and analyses to managers within the organization to assist them in decision making
what is cetified management accountant(cma)?
a professional accountant who has met certain educational and experience requirements, passed qualifying exam in the field, and been certified by the institute of certified management accountants.
what is financial accounting?
accounting information and analyses prepared for people outside the organization
1. inputs accounting documents
sales documents/purchasing document/shipping documents/payroll records/bank records/bank records/travel records/entertainment records
- 1.entries are made into journals: recording
- 2. the effects of these journal entries are transferred or posted into ledgers: classifying
- 3. all accounts are summarized
3. outputs financial statements
balance sheet/ income statement/statement of cash flows/annual reports
what is an annual report?
a yearly statement of the financial condition,progress, and expectations of an organization
what is a private accountant?
an accountant who works for a single firm, government agency, or nonprofit organization
what is a public accountant?
an accountant who provides accounting services to individuals or business on a fee basis
what is a certified public accountant(cpa)?
an accountant who passes a series of examinations established by the american institute of certified public accountants
what is auditing?
the job of reviewing and evaluating the records used to prepare a companys financial statements
what is a certified internal auditor(cia)?
an accountant who has bachelors degree and two years of experience in internal auditing , and who has passed an exam administrated by the institute of internal auditors.
what is an independent audit?
an evaluation and unbiased opinion about the accuracy of a companys financial statements.
what is a tax accountant?
an accountant trained in tax law and responsible for preparing tax returns or developing tax strategies.
what is government and not for profit accounting?
accounting system for organizations whose purpose is not generating a profit but serving ratepayers, taxpayers, and others according to a duly approved budget.
what is a accounting cycle?
- a six-step procedure that results in the preparation and analysis of the major financial statements.
- 1.analyze source documents
- 2.record transactions in journals.
- 3.transfer journal enteries to ledger
- 4.take a trial balance
- 5.prepare financial statements
- 6.analyze financial statements
what is bookkeeping?
the recording of business transactions.
what is a journal?
the record book or computer program where accounting data are first entered.
what is double-entry bookkeeping?
the concept of writing every business transaction in two places.
what is a ledger?
a specialized accounting book or computer program in which ingormation from accounting jounals is accumulated into specific categories and posted so that managers can find all the information about one account in the same place.
what is trial balance?
a summary of all the data in the account ledgers to show whether the figures are correct and balanced.
what is a financial statement?
a summary of all the transactions that have occurred over a particular period
what is the fundemental accounting equation?
assets=liabilities+owners equity; this is the basis for the balance sheet
what is the balance sheet?
the financial statement that reports a firms financial condition at a specific time
what are assets?
economic resources (things of value) owned by a firm.
what is liquidity?
how fast an asset can be converted into cash
what are current assets?
items that can or will be converted into cash within one year
what are fixed assets?
assets that are relatively permanent, such as land, buildings, and equipment.
what are intangible assets?
long-term assets (patents,trademarks,copyrights) that have no real physical form but do have value
what are liabilities?
what the buiness owes to others(debts)
what are accounts payable?
current liabilities involving money owed to others for merchandies or services purchased on credit but not yet paid for.
what are notes payable?
short-term or long-term liabilities that a business promises to repay by a certain date.
what are bonds payable?
long-term liabilities that represent money lent to the firm that must be paid back.
what is owners equity?
the amount of the business that belongs to the owners minus any liabilities owed by the business
what are retained earnings?
the accumulated earnings from a firms profitable operations that were kept in the business and not paid out to stockholders in dividends
what is a income statement?
the financial statement that shows a firms profit after costs, expenses,and taxes; it summarizes all of the resources that have come into the firm(revenue), all the resources that have left the firm, and the resulting net income.
what is the net income or net loss?
revenue left over after all costs and expenses, including taxes, are paid
what is revenue?
the value of what is received for goods sold, services rendered, and other financial sources.
what is the cost of goods sold(or cost of goods manfuactured)?
a measure of the cost of merchandise sold or cost of raw materials and supplies used for producing items for resale.
what is gross profit(gross margine)?
how much a firm earned by buying(or making) and selling merchandise.
what is the operating expense?
costs involved in operating a business, such as rent, utilities, and salaries.
what is depreciation?
the systematic write-off of the cost of a tangible asset over its estimated useful life.
what is the statement of cash flows?
financial statement that reports cash receipts and disbursements related to a firms three major activities: operations, investments, and financing
what is cash flow?
the difference between cash coming in and cash going out of a business
what is retio analysis?
the assessment of a firms financial condition and performance through calculation and interpretations of financial ratios developed from the firms fincancial statements.
what is liquidity ratios?
measure a company's ability to turn assests into cash to pay short term debts. is basically the Acid-Test ratio
What is leverage ratios?
Debt to owners equity ratio- Measure the degree to which the company is fiananced by borrowed funds that must be repayed.
debt to owners equity ratio=total liabilities
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