Accounting and Financial Statement Analysis Review

This set of vocabulary flashcards covers concepts from accounting quizzes including bank reconciliation, financial ratios, cash flow classifications, and financial statement analysis techniques.

Debit Memo

Interest expense on a loan that is directly deducted by the bank from the depositor's account.

Onerous Transfers

Transactions such as sale, barter, or exchange upon which income taxes are imposed.

Business Taxation

The imposition of taxes on the income of individuals or corporations.

Horizontal Analysis

Also called trend analysis, it is a technique for evaluating a series of financial statement data over a period of time.

Ratio Analysis

Expresses the relationship among selected items of financial statement data.

Intracompany Basis

A comparative analysis that compares an item or financial relationship of one entity with the same item or relationship within that same entity.

Trade Receivables

Receivables that arise from the sale of goods or services in the ordinary course of business.

Summarizing

The process of transferring information initially recorded in the journals to the ledger.

Accountable Event

A transaction that involves the transfer or exchange of goods or services between two or more entities.

Natural Presentation

A method of presenting the income statement where expenses of the same nature (e.g., depreciation, employee benefits, and advertising costs) are grouped or aggregated as one item.

Investing Activities

A component of the Statement of Cash Flows involving the acquisition and disposal of long-term assets such as machinery or buildings.

Financing Activities

A component of the Statement of Cash Flows involving the procurement of funds from creditors or owners, such as bank loans or mortgage notes.

Liability Method

An accounting method for recording prepayments where a collection is initially recorded as a liability (e.g., Unearned Service Revenue) and adjusted to revenue as it is earned.

Asset Method

An accounting method for recording prepayments where a payment is initially debited to an asset account (e.g., Prepaid Insurance) and adjusted to expense as it is used.

Perpetual Inventory System Closing Entries

Closing entries for a merchandising entity that do not affect the merchandise inventory account.

Inventory

Unsold grocery or merchandise items at the end of the period in a merchandising business, presented in the statement of financial position.

Debt-to-equity ratio

A financial metric computed as total liabilities divided by total equity.

Quick Ratio

A liquidity ratio that measures the ability of a company to use its near-cash or quick assets to extinguish its current liabilities immediately.