Accounting 215 First Exam

Accounting 215 with Hodge at University of Washington - Seattle Campus

About this deck

By: Matt Bannerman
Textbook: Financial Accounting
Created: 2010-10-24
Size: 59 flashcards
Views: 189

About StudyBlue

STUDYBLUE makes things that make you better at school. Things like online flashcards with photos and audio. Things like personalized quizzes and friendly reminders about when (and what) to study next. Think of it as a digital backpack™: access to all of your study materials online and on your phone. STUDYBLUE exists to make studying efficient and effective for every student, for free. Join us.

“I have been getting MUCH better grades on all my tests for school. Flash cards, notes, and quizzes are great on here. Thanks!”
Kathy

Sign up (free) to study this.

Assets

Resources owned by a company

Auditors

Trained individuals hired by a company as an independent party to express a professional opinion of the accuracy of that company's financial statements.

Balance Sheet

A financial statement that presents the financial position of the company on a particular date

Cost Effectiveness

Financial accounting information is provided only when the benefits of doing so exceed the costs

Dividends

Cash payments to stockholders (temporary account)

Expenses

Costs of providing products and services

Financial Accounting

Measurement of business activities of a company and communication of those measurements to external parties for decision-making purposes

Generally Accepted Accounting Principles

The rules of financial accounting (GAAP)

Income Statements

A financial statement that reports the company's revenues and expenses over an interval of time

Investing activities

Transactions involving the purchase and sale of long-term resources such as land, buildings, equipment and machinery and resources not directly related to a company's normal operations

Liabilities

Amounts owed to creditors

Operating Activities

Transactions involving the primary operations of the company, such as providing products and services to customers and the associated costs of doing so, like utilities, taxes, advertising, wages, rent and maintenance.

Retained Earnings

Cumulative amount of net income earned over the life of the company that has not been distributed to stockholders as dividends.

Statement of cash flows

A financial statement that measures activities involving cash receipts and cash payments over an interval of time

Statement of Stockholders equity

A financial statement that summarizes the changes in stockholders equity over an interval of time

Stockholder's Equity

Stockholders', or owners, claims to resources, which equal the difference between total assets and total liabilities.

General Ledger

All accounts used to record the company's transactions

Journal

A chronological record of all transactions affecting a firm

T-account

A simplified form of a general ledger account with space at the top for the account title and 2 sides for recording debits and credits

Trial Balance

A list of all accounts and their balances at a particular date, showing that total debits=total credits

Accrual-basis accounting

Record revenues when earned (the revenue recognition principle) and expenses with related revenues (matching principle)

Accrued expense

When a company has incurred an expense but hasn't yet paid cash or recorded an obligation to pay

Accrued revenue

When a company has earned revenue but hasn't yet received cash or recorded an amount receivable

Adjusted trail balance

A list of all accounts and their balances after we have updated account balances for adjusting entries

Adjusting entries

Entries used to record events that occur during the period but that have not yet been recorded by the end of the period

Cash-basis accounting

Record revenues at the time that cash is received and expenses at the time cash is paid.

Closing Entries

Entries that transfer the balances of all temporary accounts (revenues, expenses, dividends) to the balance of the retained earnings account

Matching principle

Recognize expenses in the same period as the revenues they help to generate

Post closing Trial balance

A list of all accounts and their balances at a particular date after we have updated account balances for closing entries

Prepaid Expenses

That cost of assets acquired in one period that will be expensed in future period

Revenue Recognition Principle

Record revenue in the period in which it's earned

Unearned Revenues

When a company receives cash in advance from a customer for products or services to be provided in the future

Bank reconciliation

Matching the balance of cash in the back account with the balance of cash in the company's own records

Examples of Cash

currency, coins, balances in savings and checking accounts, items acceptable for deposit in these accounts, such as checks received from customers and cash equivalents

Cash equivalents

Short-term investments that have a maturity date no longer than 3 months from the date of purchase

Checks outstanding

Checks the company has written that have not been subtracted from the bank's record of the company's balance

Collusion

2 or more people acting in coordination to circumvent internal controls

Internal Control

A company's plan to improve the accuracy and reliability of accounting information and safeguard the company's assets.

NSF Checks

Checks drawn on non-sufficient funds or "bad" checks from customers

Petty cash fund

Small amount of cash kept on hand to pay for minor purchases

Accounts receivable

The amount of cash owed to the company by its customers from the sale of products or services on account.

Aging Method

Using a higher percentage for "old" accounts than for "new" accounts when estimating uncollectible accounts.

Allowance for uncollectible accounts

Contra asset account representing the amount of accounts receivable that we do not expect to collect

Allowance Method

Recording an adjusting entry at the end of each period to allow for the possibility of future uncollectible accounts. The adjusting entry has the effects of reducing assets and increasing expenses.

Average Collection Period

Approximate number of days the average accounts receivable balance is outstanding. It equals 365 divided by the receivables turnover ratio.

Bad Debt Expense

The amount of the adjustment to the allowance for uncollectible accounts, representing the cost of estimated future bad debts charged to the current period.

Direct Write-off Method

Recording bad debt expense at the time we know the account is uncollectible

Credit Sales

Transfer of products and services to a customer today while bearing the risk of collecting payment from that customer in the future. Also known as sales on account or services on account.

Net Realizable Value

The amount of cash the firm expects to collect

Notes Receivable

Formal credit arrangements evidenced by a written debt instrument, or note

Receivables turnover ratio

Number of times during a year that the average accounts receivable balance is collected (or "turns over"). It equals net credit sales divided by average accounts receivable.

Sales Allowance

Seller reduces the customer's balance owed or provides at least a partial refund because of some deficiency in the company's product or service.

Sales Discount

Reduction in the amount to be paid by a credit customer if payment on account is made within a specified period of time.

Sales Return

Customer returns a product.

Trade Discount

Reduction in the listed price of a product of service.

Uncollectible accounts

Customer's accounts that are no longer considered collectible.

Operating Cash Flows

cash receipts and cash payments for transactions involving revenues and expenses

Investing Cash Flows

include purchase and sale of investments and productive long-term assets (more than a year)

Financing Cash Flows

include: borrowing money and repaying debt, with stockholders: issuing stock and paying dividends

About this deck

By: Matt Bannerman
Textbook: Financial Accounting
Created: 2010-10-24
Size: 59 flashcards
Views: 189

About StudyBlue

“I have been getting MUCH better grades on all my tests for school. Flash cards, notes, and quizzes are great on here. Thanks!”
Kathy