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Tangible Asset

Assets like buildings, furniture, and vehicles that have a physical form.

Intangible Asset

Assets like copyrights, franchises, and trademarks that lack physical substance.

Gain or Loss on Disposal

The difference between the selling price and the book value of an asset upon disposal.

Acquisition Cost

The total cost incurred to acquire an asset, including invoice price, transportation, installation, and other related costs.

Share Repurchase Impact

The effects on equity and common shares outstanding when a company repurchases its shares.

Recording Transactions

The proper accounting entries when exchanging common shares for services rendered.

Stock Dividend Components

Components involved in the accounting entry for a stock dividend declaration.

Inventory Costing

The impact of cost formulas like FIFO and weighted-average on net earnings during decreasing unit costs.

Gain on Sale

The treatment of gains on the statement of cash flows under the indirect method.

Allowance Method

Procedures and effects of the allowance method for uncollectible accounts.

Stock Dividend Effects

The impact of a stock dividend on shareholders' equity and common shares.

Bad Debt Adjustment

Adjusting entries required to record bad debts based on aging of accounts receivable.

Allowance Balance

Determining the ending balance in the allowance for doubtful accounts based on transactions.

Depreciation Expense

Calculating depreciation expense using the double declining-balance method.

Bond Retirement Entry

The accounting entries involved in retiring a bond at a premium.

Bond Interest Payment

Journal entry to record the first interest payment on bonds issued at a discount.

Bank Reconciliation

Determining the cash balance per books before starting the bank reconciliation process.

Inventory Overstatement

Effects of an overstatement of ending inventory under the periodic inventory system and FIFO method.

Stock Split Impact

Effects of a 2 for 1 stock split on retained earnings, shares, and equity.

Investing Activities

Activities involving the acquisition and disposal of long-term assets like property, plant, and equipment.

Inventory Valuation

Calculating the value of inventory at the end of a period considering purchases, returns, and sales.

Retained Earnings Balance

Determining the ending balance in the retained earnings account based on revenues, expenses, and dividends.

Accrual Method

Recognizing expenses when they are incurred to generate revenues under the accrual accounting method.

Statement of Earnings

The financial statement where the company's revenues, expenses, and net income are reported.

Statement of Cash Flows

The financial statement that shows the inflows and outflows of cash during a specific period.

Comparability

Ensuring that financial information can be compared with similar information from other periods or other companies.

Faithful Representation

Financial information that is complete, neutral, and free from error, providing a true and fair view.

Provide information that is useful to individuals making investment and credit decisions

The main objective of financial reporting.

Depreciation Expense

The amount allocated for the decrease in value of assets over time.

Impairment Loss

The reduction in the value of an asset due to it being unable to recover its carrying amount.

Gain on Disposal

The profit realized from selling an asset for more than its carrying amount.

Statement of Cash Flows

A financial statement showing the inflows and outflows of cash during a specific period.

Operating Activities

Activities related to the primary business operations of a company.

Investing Activities

Activities involving the purchase and sale of long-term assets.

Financing Activities

Activities related to raising capital and repaying investors.

Net Increase in Cash

The overall change in cash from the beginning to the end of a period.

Long-term Investments

Assets held for an extended period, typically not for trading purposes.

Retained Earnings

The portion of net earnings not distributed as dividends but retained by the company.

Statement of Financial Position

A financial statement that reports the financial position of a company at a specific point in time, including its assets, liabilities, and equity.

Internal User

Individuals within a corporation who use financial data for decision-making, such as senior level management, the assistant controller, and the human resource manager.

Accounting Equation

Assets = Liabilities + Shareholders' Equity; must balance for accurate financial reporting.

Accounting Cycle

The series of steps in the accounting process, including analyzing transactions, recording them, preparing financial statements, and detecting errors.

Prepaid Insurance

An asset representing insurance paid in advance, with a portion expensed as insurance expense over time.

Net Sales

Total sales revenue minus any deductions like discounts, returns, or fees, resulting in the actual revenue earned.

Shareholder's Equity

The residual interest in the assets of a company after deducting its liabilities, representing the shareholders' ownership.

Accounts Receivable

Amounts owed to a company by customers for goods or services provided on credit.

Recovery of Accounts Receivable

Process of collecting on previously written-off accounts, affecting the net amount of accounts receivable.

Receivables Turnover Ratio

A measure of how efficiently a company collects on credit sales, with higher ratios indicating faster collection.

Cost of Inventory

The expenses directly related to acquiring and preparing inventory for sale, excluding certain costs like sales commissions.

Perpetual Inventory System

A method of tracking inventory levels in real-time, updating records with each sale or purchase.

Weighted Average Costing

Inventory valuation method that calculates the average cost of inventory based on the units available for sale.

FIFO Costing Method

Inventory valuation method that assumes the first items purchased are the first sold, impacting the cost of goods sold calculation.

Deferred Revenue

Revenue received in advance for goods or services that have not yet been provided, requiring an adjusting entry to recognize the revenue as earned.

Adjusting Entry

An entry made in the accounting records to update accounts at the end of an accounting period to reflect the true financial position.

Bad Debt Expense

The amount recognized as an expense due to the inability to collect on certain accounts receivable.

Allowance for Doubtful Accounts

A contra-asset account that reduces the accounts receivable to the amount expected to be collected.

Perpetual Inventory System

A system of tracking inventory where the quantity of inventory is updated continuously as sales and purchases are made.

Accrual Basis

An accounting method that recognizes revenue when earned and expenses when incurred, regardless of when cash is exchanged.

Adjusting Journal Entry

Entries made at the end of an accounting period to update accounts and ensure accurate financial reporting.

Fiscal Year End

The end of a company's accounting year, often used to prepare financial statements and close out accounts.

Accounts Receivable

Amounts owed to a company by customers for goods or services provided on credit.

Cash basis

A method of accounting where transactions are recorded when cash is exchanged.

Deferred service revenue

Revenue received in advance for services that have not yet been provided.

Supplies

Items used in the course of business operations.