Accounting Mid-Term Vocab

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Mikki8
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127964
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Accounting Mid-Term Vocab
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2012-01-15 15:48:18
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Accounting
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Accounting Mid-Term Vocab
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  1. accounting period
    a period of time covered by an accounting report
  2. accounting system
    a systematic process of recording and reporting the finacial information resulting from business transactions
  3. balance sheet
    a report of the balances in all asset, liability, and owner's equity accounts, at the end of the period
  4. business entity
    exists independently of its owner's personal holdings. The accounting records and reports are maintained separately and contain financial information related only to the business
  5. capital
    money supplied by investors, banks, or owners of a business. Refers to the dollar value of assets contributed to the business
  6. charter
    a legal written permission that gives a corporation certain rights and privileges and spells out the rules under which the corporation is to operate
  7. corporation
    business organization that is recognized by law to have a life of its own
  8. credit
    an agreement to pay for a purchase at a later time; an entry to the right side of a T account
  9. current assets
    assets that are either used up or converted to cash during the normal operating cycle of the business, usually one year
  10. current liabilities
    debts of the business that must be paid within the next accounting period
  11. current ratio
    the relationship between current assets and current liabilities; calculated by dividing the dollar amount of current assets by the dollar amount of current liabilities
  12. debit
    an amount entered on the left side of the T account
  13. entrepreneur
    a person who transforms ideas for products or services into real-world businesses
  14. expense
    the cost of the goods or services that are used to operate a business; expenses decrease owner's equity
  15. financial accounting
    reporting information to external users (individuals not directly involved in the day-to-day operations of a business)
  16. financial reports
    summarized information about the financial status of a business
  17. financial statements
    prepared to summarize the changes resulting from business transactions that occur during an accounting period
  18. free enterprise system
    a system in which people are free to produce the goods and services they choose
  19. GAAP
    (generally accepted accounting principles) a set of rules used by accountants to prepare financial reports
  20. going concern
    the assumption that a business entity will continue to operate for an indefinite time
  21. income statement
    a report of the net income or net loss for a fiscal period; sometimes called a "profit and loss" statement
  22. liquidity ratio
    the measure of a business's ability to pay its current debts as they become due and to provide for unexpected needs of cash
  23. loss
    the result of a company's spending more than it receives in revenue
  24. management accounting
    reporting information to management, often referred to as accounting for internal users of accounting information
  25. manufacturing business
    a business that transforms raw materials into finished products through the use of labor and machinery
  26. matching principle
    principle stating that expenses are compared to revenues for the same period
  27. merchandising business
    a business that buys goods (for example, books or clothing) and then sells those goods for a profit
  28. net income
    the amount of revenue that remains after expenses for the period are subtracted
  29. net loss
    the amount by which total expenses exceed total revenue
  30. partnership
    business owned by two or more persons, called partners, who agree to operate the business as co-owners
  31. profit
    the amount of revenue earned above the expenses incurred to operate the business
  32. profitability ratio
    ratios used to evaluate the earnings performance of a business during the accounting period (for example, return on common stockholders' equity)
  33. quick ratio
    a measure of the relationship between short-term assets and current liabilities
  34. ratio analysis
    involves the comparison of two amounts on a financial statement and the evaluation of the relationship between these amounts
  35. report form
    a format for preparing the balance sheet in which the classifications of accounts are listed one under another
  36. return on sales
    the portion of each sales dollar that represents profit. To calculate this ratio, divide net income by sales
  37. revenue
    income earned from the sale of goods and services
  38. revenue recognition
    accounting principle that states that revenue is recognized and recorded on the date it is earned even if cash has not been received
  39. ruling
    a single line drawn under a column of figures to signify that the entries above the rule are to be added or subtracted; a double rule under an amount signifies a total
  40. service business
    provides a needed service for a fee
  41. sole proprietorship
    a business owned by one person
  42. statement of changes in owner's equity
    a financial statement prepared to summarize the effects of busines transactions on the capital account
  43. temporary capital accounts
    accounts used to record information during the fiscal period that will be transferred to a permanent capital account at the end of the period
  44. trial balance
    a proof of the equality of total debits and credits, the fifth step in the accounting cycle
  45. withdrawal
    the removal of cash or another asset from the business by the owner for personal use
  46. work sheet
    a working paper used to collect information from ledger accounts for use in completing end-of-fiscal-period work

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