MANGMT 1010: FINAL EXAM
55 Cards in this Set
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Accounting
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collecting, analyzing and communicating financial information
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bookkeeping
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accountants keep records of taxes paid, income received and expenses incurred
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Accounting Information System
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procedure for identifying, measuring, recording and retaining financial information for later use
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Controller
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chief accounting officer
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Financial accounting
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concerned with external info users
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Managerial accounting
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serves internal users
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Certified public accountants
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offer accounting services to the public
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Audit
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examines a company's AIS to determine if financial reports are accurate
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Generally Accepted Accounting Principle (GAAP)
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formulated by accounting boards to govern the content and form of financial reports
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Tax Services
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assistance with tax return preparation and tax planning
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Management Advisory Services
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services provided by an accounting firm. Include: financial planning, planning corporate merger, production scheduling and AIS design
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Core competencies
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unique combination of skills, technology and knowledge
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Private accountants
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most are management accountants who support managers in various activities
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Certified accounting
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recognizes accountants who have met experience and examination requirements
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Forensic accounting
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the use of accounting for legal purposes
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Certified fraud examiners
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awarded to those with expertise in fraud issues and allegations
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Sarbanes-Oxley Act of 2002
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federal regulation designed to restore trust in corporate accounting practices
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Accounting Equation
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Assets= Liabilities + Owner's Equity
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Liabilities
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debt that a firm owes to and outside party
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Assets
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economic resource that benefits the firm or the the owner
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Owner's Equity
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the amount of money that an owner would receive if all the assets were sold and the liabilities were paid off
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Balance sheets
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snapshot of a company's financial statement
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Current assets
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cash and assets that can be converted into cash in less than a year
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Fixed assets
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assets with long-term value, ex: land, buildings and equipment
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Liquidity
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ease of converting assets into cash
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Intangible assets
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have monetary value in form of expected benefits
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Goodwill
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the amount paid for an existing business beyond the value of its other assets
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Current liabilities
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debts that must be paid within a year
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Accounts payable
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unpaid bills to suppliers
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Long-Term liabilities
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debts that are not due within a year, useless must be paid with interest
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Paid-in capital
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money invested by owners
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Retained Earnings
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net profits kept by a firm rather than being paid out to stockholders
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Income statement
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description of revenues and expenses that results in a firm's annual profit
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Revenues
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funds that come into a business from the sales of goods or services
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Cost of revenues
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cost of obtaining the revenues from other companies
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Cost of goods sold
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cost of obtaining materials to make products sold
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Gross profit
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quick to calculate profit, considers only revenues and cost of revenues
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Operating expenses
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resources that must flow out of a company if it wants to earn revenues
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Operating income
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compares gross profit from operations against operating expenses
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Net income
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subtracting income taxes from operating income
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Statement of cash flows
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shows the effect that on cash that come from three aspects of business: operating activities, investing activities and financing activities
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Cash flows from operation
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concerns main operating activite
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Cash flows from financing
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net cash from all financial activities
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Cash flows from investing
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net cash used in or provided by investing
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Revenue recognition
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formal recording and reporting of revenues
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Full disclosure
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GAAP requires financial statements to include interpretations and explanations of the numbers
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Solvency ratios
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used to estimate long term and short term risk
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Long-term risk
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calculated by dividing (debt minus total liabilities) by owner's equity (D-L)/OE
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Short-term risk
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measures liquidity and ability to pay immediate debts
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Current ratio
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Current assets/ Current liabilites
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Profitably ratios
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for measuring potential earnings
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Activity Ratio
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for evaluating management's use of assets
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Leverage
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the ability to make otherwise unaffordable investments
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Earnings per share
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net income/ number of shares outstanding= net earnings
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Code of professional conduct
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accountants must meet ethics standards to maintain certification
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MANGMT 1010: Exam 1