Intermedia accounting: exam 1

gain

positive difference when the proceeds from selling or disposing of an asset exceed its carrying amount or book value

materiality

an aspect of relevance that depends on a company's particular situation and is based on the nature or magnitude of the item that is being reported

comprehensive income

reports all changes in shareholders equity

faithful representation

agreement between a measure or description and the real world phenomenon it purports to represent

going concern

in the abscence of infor to the contrary, a business will operate indefinitely

equity

assets - liabilities

Federal Accounting Standards Advisory Board (FASAB)

the public sector organization responsible for setting accounting standards in the US

prepayments

cash flow proceeds either exp/rev recognition

post closing trial balance

list of all permanent accounts and their balances after closing entries have been recorded

accruals

when the cash flow comes after either exp/rev recognition

Unadjusted Trial Balance

list of the general ledger accounts and their balances after recording all transactions during the period but before any adjusting entries

adjusted trial balance

trial balance after adjusting entries have been recorded

assets

present rights of an entity to an economic benefit

dividends

distribution of assets the company has generated on behalf of its shareholders; one way a corporation provides a return to its shareholders

paid-in capital

invested capital consisting primarily of amounts invested by shareholders when they purchase shares of stock from the corporation

retained earnings

amounts earned by the corporation on behalf of its shareholders and not distributed to them as dividends

liabilities

present obligations of a particular entity to transfer an economic benefit

shareholders' equity

residual amount after liabilities have been subtracted from asset

permanent account

assets, liabilities, equity

temporary accounts

revenues, expenses, dividends

current liabilities

payable within one year from the balance sheet due

net income

Revenues - Expenses

interest

principal x rate x time

related party transaction

transactions with owners, management, families of owners or management, affiliated companies, and other parties that can significantly influence or be influenced by the company

deferred revenue

cash in advance from a customer for goods or services to be provided in a future period

accounts receivable

amounts to be recieved from the sale of goods/services on account

prepaid expenses

cost of assets acquired in one period and expensed in a future period

subsequent events

a significant development that takes place after the company;s fiscal year - end but before the financial statements are issued

MD&A

provides biased but informed perspective of a company's operations, liquidity, and capital resources

franchise

contractual arrangement under which the franchiser grants the franchisee the exclusive right to use the franchisor's trademark or tradename within a geographical area, usually for a specific period of time

horizontal analysis

analysis of financial statements that compares account values reported on these statements over two or more years to identify changes and trends

vertical analysis

expresses each item in a financial statement as a percentage of the same base amount

intangible asset

An asset with no physical form that is valuable because of the special rights it carries.

tangible asset

asset that has physical substance

market value

the current price that buyers are willing to pay for a company or asset on the open market

book value

the net value of a company's assets recorded on its balance sheet

Working Capital

current assets - current liabilities