РефератыИностранный языкAcAccounting Essay Research Paper Chapter 17Accounting process

Accounting Essay Research Paper Chapter 17Accounting process

Accounting Essay, Research Paper


Chapter 17


Accounting: process of systematically collecting, analyzing, and reporting financial information.


Private accountant: employed by a organization


Private Accountants provide the following services:


General accounting: recording business transactions and preparing financial statements


Budgeting: Develop budgets for sales and operating expenses.


Cost Accounting: Determining the cost of producing specific products or services.


Tax Accounting: Planning tax strategy and preparing tax returns for the firm.


Public Accountant: an accountant whose services may be hired on a fee basis by individuals or firms.


Chartered accountant (CA) or Certified general accountant (CGA), Certified management accountant (CMA): an individual who has met requirements for accounting education and experience and has passed a set of accounting examinations from their respective professional organization.


Assets: the resources that the firm owns


Liabilities: firms debts and obligation- what it owes to others


Owners Equity: the difference between a firms assets and its liabilities


Accounting Equation: the basis for the accounting process:


assets = liabilities + owners? equity


Revenues: dollar amounts received by a firm


Expenses: the costs incurred in operating a business.


Double-entry book-keeping: a system in which each financial transaction is recorded as two separate accounting entries to maintain the balance shown in the accounting equation.


General journal: a book of original entry in which typical transactions are recorded in order of their occurrence.


General Ledger: book of accounts containing a separate sheet or section for each account.


Posting: process of transferring journal entries to the general ledger.


Trial Balance: a summary of the balances of all general ledger accounts at the end of the accounting period.


Balance Sheet: summary of the dollar amounts for a firm?s assets, liabilities, and owners? equity accounts at a particular time.


Liquidity: the ease which an asset can be converted into cash.


Current assets: cash and other assets can be converted into cash or that will be used in a year or less.


Prepaid expenses: assets that have been paid for in advance, but not been used.


Fixed assets: assets that will be held or used for a period longer than one year.


Depreci

ation: process of apportioning the cost of a fixed asset over the period during which it will be used.


Intangible assets: do not exist physically but have a value based on legal rights or advantages that they confer on a firm.


Goodwill: value of a firm?s reputation, location, earning capacity, and other, intangibles that make the business a profitable concern.


Current liabilities: debts that will be repaid in one year or less.


Accounts Payable: short-term obligations that arise as a result of making credit purchases.


Notes Payable: Obligations that have been secured with promissory notes.


Long-term liabilities: debts that need not be repaid for at least one year.


Income Statement: a summary of a firm?s revenues and expenses during an accounting period.


Gross sales: the total dollar amount of all goods and services sold during the accounting period.


Net Sales: the actual dollar amount received by a firm for the goods and services it has sold, after adjustments for returns, allowances, and discounts.


Cost of Goods sold: sold during the accounting period; equal to beginning inventory plus net purchases less ending inventory.


Cost of goods sold = beginning + net – ending


Inventory purchases inventory


Gross profit on sales: net sales ? cost of goods sold


Net income: profit earned (or the loss suffered) by a firm during an accounting period, after all expenses have been deducted from revenue.


Statement of cash flows: illustrates the effect on cash of the operating, investing, and financing activities of a company for an accounting period.


Financial ratio: a number that shows the relationship between two elements of a firms financial statements


Net profit margin = Net income after taxes


Net sales


Return on equity = net income after taxes


Owners? equity


Earnings per share = Net income after taxes


Common-stock shares


Outstanding


Working Capital: difference between current assets and current liabilities.


Current Ratio = current assets


current liabilities


acid-test ratio = current assets ? inventory


current liabilities


accounts receivable turnover = net sales


A/R


Debts-to-assets ratio = total liabilities


Total assets


Debt-to-equity ratio = total liabilities


owners? equity


Bibliography


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