Accounting ALL chaps

The process of identifying, recording, summarizing & analyzing a company’s financial transactions, processing this into information and communicating this information to decision makers.

Individuals within a company who use accounting information for day-to-day management decisions and to monitor the company's financial health.

Individuals or entities outside of the company who use accounting information to make decisions, such as investors, shareholders, banks, creditors, and public authorities.

Information that influences decisions by predicting future outcomes or confirming past ones.

Data that is complete, unbiased, and free from errors, accurately reflecting economic reality.

Data that is consistent over time and with other entities to support effective comparisons.

Independent parties agree that information accurately represents an economic event.

Information that is available early enough to help users make decisions when it matters most.

Only financial transactions that can be expressed in terms of money are recorded in accounting.

Requires a clear separation between the financial activities of a business entity and those of its owners and other entities.

A business owned by one person.

A business owned by two or more persons associated as partners.

A business owned by shareholders.

Assets = Liabilities + Equity. It represents the relationship between what a business owns (assets) and what it owes (liabilities and equity).

What a company owns, such as cash, accounts receivable, inventory, and property.

Debts and obligations of a company, such as accounts payable and notes payable.

Represents the owners' claim on the company's assets, including share capital and retained earnings.

The costs a company incurs to run its business, such as rent, wages, and supplies.

Represents every positive item in an account, indicating an increase in cash or assets.

Represents every negative amount in an account, indicating a payment of cash or a decrease in assets.

Every financial transaction has two equal and opposite effects, recorded as a debit and a credit.

Entering transaction data in the journal, including the date, accounts and amounts to be debited and credited, and a brief explanation of the transaction.

The first entry made in a journal, followed by a credit entry.

Specific and correct titles used in journalizing to describe the content of an account.

A transaction involving two accounts, one debit and one credit.

A transaction involving more than two accounts.

A collection of T-accounts used to record and track financial transactions.

A ledger that contains all asset, liability, and equity accounts.

A three-column form of account with debit, credit, and balance columns.

Where transactions are initially recorded in detail.

The process of transferring journal entries to the ledger accounts.

A list of accounts and their balances at a given time to ensure the equality of debits and credits.

Recognizing revenue when a sale is made or a service is provided, and recording expenses when goods or services are received.

Recording income and expenses only when cash is exchanged.

A promise made by a company to provide a product or service to a customer.

Recognizing revenue in the accounting period when the performance obligation is satisfied.

Recognizing expenses in the period when efforts are made to generate revenue.

Entries made to ensure that revenue and expense recognition principles are followed.

Expenses or revenues recognized at a later date than when cash was exchanged.

Costs paid in advance for something to be received or used in the future.

Payments received in advance for products or services not yet delivered.

Expenses or revenues recognized at an earlier date than when cash will be exchanged.

Revenue earned but not yet received or recorded.

Costs incurred but not yet paid or recorded.

A list of accounts and their balances after adjusting entries have been made.

Reports that summarize a company's financial performance and position.

An important step in the accounting process to ensure accuracy and form the basis for financial statements.

A trial balance that reflects updated account balances after making adjusting entries, used to ensure the books are in balance and as a basis for preparing financial statements.

An additional account included in the adjusted trial balance, representing insurance expenses paid in advance.

An additional account included in the adjusted trial balance, representing amounts owed by the company for borrowed funds.

An additional account included in the adjusted trial balance, representing interest expenses owed by the company.

An additional account included in the adjusted trial balance, representing revenue received in advance for services not yet provided.

An additional account included in the adjusted trial balance, representing salaries and wages owed by the company.

A financial statement that shows the revenues and expenses of a company, with the net income or net loss calculated by subtracting total expenses from total revenues.

A financial statement that shows the beginning balance of retained earnings, adds net income, and subtracts dividends to calculate the ending balance of retained earnings.

A financial statement that shows the assets, liabilities, and equity of a company at a specific point in time.

An alternative approach where prepaid expenses are recorded as expenses immediately, rather than as assets.

An alternative approach where unearned revenues are recorded as revenue immediately, even if the services or products are not yet delivered.

The assumption that financial transactions are recorded in terms of money.

The assumption that a clear separation exists between the financial activities of a business entity and those of its owners and other entities.

The belief that financial information should be divided into specific time periods for easier analysis and reporting.

The assumption that a business will continue its operations indefinitely.

The principle that assets are recorded at their original cost and are not adjusted for changes in market value over time.

The principle that assets and liabilities are reported at their current market value when that value is readily available and provides more relevant information.

The principle that revenue is recognized when a company satisfies its performance obligations, typically when goods are transferred or services are performed.

The principle that expenses are recognized in the same period as the related revenues to accurately match costs with the revenue they help generate.

The principle that requires companies to disclose all important information that could impact financial statement users in accompanying notes when it cannot be reported directly on the financial statements.

Long-lived assets that are not physical, such as goodwill, patents, copyrights, trademarks, and property.

The practice of allocating the cost of assets over a number of years by systematically expensing a portion of the asset's cost each year.

Accumulated Depreciation Account:Shows the total amount of depreciation that the company has expensed so far in the asset's life.

Investments in shares and bonds of other companies that are normally held for many years.

Assets that a company expects to convert into cash or use within one year of its operating cycle, including cash, investments, receivables, inventories, and prepaid expenses.

The ownership interest in a company, which can vary depending on the form of business organization.

Obligations that a company expects to pay after one year, such as bonds payable, mortgages payable, and long-term notes payable.

Obligations that the company is to pay within the coming year of its operating cycle, including accounts payable, salaries and wages payable, and notes payable.

The average time it takes for a company to purchase inventory, sell it on account, and collect cash from customers.

Companies that buy and sell merchandise as their primary source of revenue.

The total cost of merchandise sold during a period, directly related to the revenue recognized from the sale of goods.

All expenses incurred in the purpose of selling inventory.

A system where companies keep detailed records of the cost of each inventory purchase and sale, determining the cost of goods sold each time a sale occurs.

A system where companies do not keep detailed inventory records throughout the period, determining the cost of goods sold only at the end of the accounting period.

Inventory methods where companies manufacture or purchase goods only when needed, lowering inventory levels and costs.

Basic goods that will be used in production but have not yet been placed into production.

Goods that have been placed into the production process but are not yet complete.

Goods that are ready to be sold.

The process of counting, weighing, or measuring each kind of inventory on hand.

Goods that are in the process of being shipped or delivered but have not yet reached the buyer or seller.

Goods that are held by one party (the consignor) but are owned by another party (the consignee) who will sell the goods on behalf of the consignor.

When a business keeps and sells goods on behalf of another business for a fee, without having ownership of the goods.

The cost associated with acquiring and preparing goods for sale, including modifications made to the goods.

A method of inventory costing where companies keep records of the original cost of each individual inventory item.

An assumed cost flow method where the earliest goods purchased are assumed to be the first ones sold.

An assumed cost flow method where the cost of goods sold and the value of the inventory are determined based on the average price of all units in inventory.

An assumed cost flow method where the newest inventory items are assumed to be the first ones sold, used for financial reporting in the United States.

The impact of different cost flow assumptions on the income statement, which can affect net income.

The impact of different cost flow assumptions on the value of ending inventory, which can affect the accuracy of financial statements.

The impact of different cost flow assumptions on tax calculations, which can result in significant tax savings in a period of rising prices.

The average-cost method is an inventory costing method that calculates the cost of goods sold and ending inventory by taking the average cost of all units available for sale during the period.

The consistency concept in accounting states that a company should use the same accounting principles and methods from year to year to ensure comparability of financial statements over time.

Inventory errors occur when there are mistakes in counting, pricing, or recognizing the transfer of legal title to goods in transit. These errors can affect both the income statement and the statement of financial position.