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2012-04-16 15:29:36

key terms from chapter seventeen - Nickels, W.G., 2010. Understanding Business. McGraw-Hill Companies, Inc: New York. ed9, p. 454-482.
Show Answers:

  1. Define: accounting
    the recording, classifying, summarizing, and interpreting of financial events and transctions to provide management and other interested parties the information they need to make good decisions (p. 456)
  2. Define: managerial accounting
    accounting used to provide information and analyses to managers inside the organization to assist them in decision making (p. 457)
  3. Define: certified management accountant (CMA)
    a professional accountant who has met certain educational and experience requirements, passed a qualifying exam, and been certified by the Institute of Certified Management Accountants (p. 458)
  4. Define: financial accounting
    accounting information and analyses prepared for people outside the organization (p. 458)
  5. Define: annual report
    a yearly statement of the financial condition, progress, and expectations of an organization (p. 458)
  6. Define: private accountant
    an accountant who works for a single firm, government agency, or nonprofit organization (p. 458)
  7. Define: public accountant
    an accountant who provides accounting services to individuals or businesses on a fee basis (p. 459)
  8. Define: certified public accountant (CPA)
    an accountant who passes a series of examinations established by the American Institute of Certified Public Accountants (AICPA) (p. 459)
  9. Define: auditing
    the job of reviewing and evaluating the information used to prepare a company's financial statements (p. 460)
  10. Define: independent audit
    an evaluation and unbiased opinion about the accuracy of a company's financial statements (p. 460)
  11. Define: certified internal auditor (CIA)
    an accountant who has a bachelor's degree and two years of experience on internal auditing, and who has passed an exam administered by the Institute of Internal Auditors (p. 460)
  12. Define: tax accountant
    an accountant trained in tax law and responsible for preparing tax returns or developing tax strategies (p. 461)
  13. Define: government and not-for-profit accounting
    accounting system for organizations whose purpose is not generating a profit but serving ratepayers, taxpayers, and other according to a duly approved budget (p. 461)
  14. Define: accounting cycle
    a six-step procedure that resultsin the preparation and analysis of the major financial statements (p. 462)
  15. Define: bookkeeping
    the recording of business transactions (p. 642)
  16. Define: journal
    the record book or computer program where accounting data are first entered (p. 462)
  17. Define: double-entry bookkeeping
    the practice of writing every business transaction in two places (p. 462)
  18. Define: ledger
    a specialized accounting book of computer program in which information from accounting journals is accumulated into specific categories and posted so that managers can find all the information about one account in the same place (p. 462)
  19. Define: trial balance
    a summary of all the financial data in the account ledgers that ensures the figures are correct and balanced (p. 462)
  20. Define: financial statement
    a summary of all the transactions that have occurred over a particular period (p. 463)
  21. Define: fundamental accounting equation
    Assets = Liabilities + Owners' equity; this is the basis for the balance sheet (p. 464)
  22. Define: balance sheet
    financial statement that reports a firm's financial condition at a specific time and is composed of three major accounts: assets, liabilities, and owers' equity (p. 465)
  23. Define: assets
    economic resources (things of value) owned by a firm (p. 466)
  24. Define: liquidity
    the ease with which an asset can be converted into cash (p. 466)
  25. Define: current assets
    items that can or will be converted into cash within one year (p. 466)
  26. Define: fixed assets
    assets that are relatively permanent, such as land, buildings, and equipment (p. 466)
  27. Define: intangible assets
    long-term assets (e.g., patents, trademarks, copyrights) that have no reall physical form but do have value (p. 466)
  28. Define: liabilities
    what the business owes to others (debts) (p. 466)
  29. Define: accounts payable
    current liabilities are bills the company owes to others for merchandise or services purchased on credit but not yet paid for (p. 466)
  30. Define: notes payable
    short-term or long term liabilities that a business promises to repay by a certain date (p. 467)
  31. Define: bonds payable
    long-term liabilities that represent money lent to the firm that must be paid back (p. 467)
  32. Define: owners' equity
    the amount of the business that belongs to the owners minus any liabilities owed by the business (p. 467)
  33. Define: retained earnings
    the accumulated earnings from a firm's profitable operations that were reinvested in the business and not paid out to stockholders in dividends (p. 467)
  34. Define: income statement
    the financial statment that shows a firm.s 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 (p. 468)
  35. Define: net income or net loss
    revenue left over after all costs and expenses, including taxes, are paid (p. 468)
  36. Define: cost of goods sold (or cost of goods manufactured)
    a measure of the cost of merchandise sold or cost of raw materials and supplies used for producing items for resale (p. 469)
  37. Define: gross profit (or gross margin)
    how much a firm earned by buying (or making) and selling merchandise (p. 496)
  38. Define: operating expenses
    costs involved in operating a business, such as rent, utilities, and salaries (p. 469)
  39. Define: depreciation
    the systematic write-off of the cost of a tangible asset over ite estmated useful life (p. 469)
  40. Define: statement of cash flows
    financial statement that reoorts cash receipts and disbursements related to a firm's three major activities: operations, investments, and financing (p. 471)
  41. Define: cash flow
    the difference between cash coming in and cash going out of a business (p. 472)
  42. Define: ratio analysis
    the assessment of a firm's financial condition using calculations and interpretations of financial ratios developed from the firm's financial statements (p. 473)