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38 Cards in this Set
- Front
- Back
the Board of Directors
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elected by the shareholders to represent their interests, is responsible for maintaining the integrity of the company's financial reports.
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U.S. Securities and Exchange Commission (SEC)
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protects investors and maintains the integrity of the securities markets. Oversees the work of the FASB in setting GAAP, the Public Company Accounting Oversight Board, and the Stock Exchanges.
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The Public Company Accounting Oversight Board (PCAOB)
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Sets auditing standards for independent auditors of public companies.
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Unqualified (Clean) Audit Opinion
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Auditor's statement that the financial statements are fair presentations in all material respects in conformity with GAAP.
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Earnings Forecasts
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predictions of earnings for future accounting periods
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Institutional Investors
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managers of pension, mutual, endowment, and other funds that invest on the behalf of others.
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Private Investors
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include individuals who purchase shares in companies.
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Lenders (Creditors)
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include suppliers and financial institutions that lend money to companies.
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Cost-Benefit Constraint
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suggests that the benefits of accounting for and reporting information should outweigh the costs
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Relevant Information
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can influence a decision; It is timely and has predictive and/or feedback value.
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Reliable Information
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accurate, unbiased and verifiable information
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Consistent Information
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can be compared over time because similar accounting methods have been applied
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Comparable Information
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allows comparisons across business because similar accounting methods have been applied
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Material Amounts
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amounts that are large enough to influence a user's decision
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Conservatism
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suggests that care should be taken not to overstate assets and revenues or understate liabilities and expenses.
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Press Release
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a written public news announcement normally distributed to major new services.
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Form 10-K
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the annual report that publicly traded companies must file with the SEC
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Form 10-Q
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the quarterly report that publicly traded companies must file with the SEC
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Form 8-K
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used by publicly traded companies to disclose any material event not previously reported that is important to investors (e.g. auditor changes, mergers)
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Intangible Assets
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have no physical existence and a long life
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Par Value
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a legal amount per share established by the board of directors; it establishes the minimum amount a stockholder must contribute and has no relationship to the market price of the stock.
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Additional Paid-In Capital
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the amount of contributed capital less the par value of the stock
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Gross Profit (Gross Margin)
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Net sales less cost of goods sold
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Income from Operations (Operating Income)
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equals net sales less cost of goods sold and other operating expenses
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Income Before Income Taxes (Pretax Earnings)
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revenues minus all expenses except income tax expense
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Credit Card Discount
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the fee charged by the credit card company for services
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FOB (free on board) Shipping Point
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title changes hands at shipment and the buyer normally pays for shipping
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FOB Destination
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title changes hands on delivery and the seller normally pays for shipping
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Sales Discount
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a cash discount offered to encourage prompt payment of an account receivable
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Sales Returns and Allowances
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a reduction of sales revenues for return of or allowances for unsatisfactory goods
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Allowance Method
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bases bad debt expense on an estimate of uncollectible accounts
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Bad Debt Expense (doubtful accounts expense, uncollectible accounts expense, provision for uncollectible accounts)
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the expense associated with estimated uncollectible accounts receivable.
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Allowance for Doubtful Accounts (allowance for bad debts, allowance for uncollectible accounts)
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a contra-asset account containing the estimated uncollectible accounts receivable
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Percentage of Credit Sales Method
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bases bad debt expense on the historical percentage of credit sales that result in bad debts
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Aging of Accounts Receivable Method
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estimates uncollectible accounts based on the age of each account receivable
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Internal Controls
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are the processes by which a company safeguards its assets and provides reasonable assurance regarding the reliability of the company's financial reporting, the effectiveness and efficiency of its operations, and its compliance with applicable laws and regulations.
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Bank Statement
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a monthly report from a bank that shows deposits recorded, checks cleared, other debits and credits, and a running bank balance
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Bank Reconciliation
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the process of comparing (reconciling) the ending cash balance in the company's records and the ending cash balance reported by the bank on the monthly bank statement.
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