Professional Documents
Culture Documents
IDENTIFICATION:
1. A business owned by one person. - SOLE PROPRIETORSHIP
2. A business owned by two or more individuals. - PARTNERSHIP
3. A legal entity incorporated in a particular state. - CORPORATION
4. GAAP – GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
5. Directs a company to recognize revenue in the period in which it is earned. - REVENUE
RECOGNITION PRINCIPLE
6. It is not considered earned until a product or service has been provided. - REVENUE
7. States that we must match expenses with associated revenues in the period in which the
revenues were earned. - MATCHING PRINCIPLE
8. States that virtually everything the company owns or controls (assets) must be recorded
at its value at the date of acquisition. - HISTORICAL COST PRINCIPLE
9. This concept is important when valuing a transaction for which the dollar value cannot be
as clearly determined. - CONSERVATISM PRINCIPLE
10. The are prepared under the accrual basis, which is a method of financial
reporting that measures all business transactions in accordance with when they occur,
whether that may involve cash or not. - FINANCIAL STATEMENT
11. Assumes a business will continue to operate as normal in the foreseeable future. -
GOING CONCERN ASSUMPTION
12. This assumption describes the time interval between financial statement reports. - THE
PERIOD ASSUMPTION
13. In charge of administering the professional examination regulating and licensing of
professionals promulgation and enforcement of professional ethics and standards. -
PROFESSIONAL REGULATION COMMISSION (PRC)
14. In charge of conducting semi-annually the licensure examination. - BOARD OF
ACCOUNTANCY (BOA)
15. In charge of formulating or developing the accounting standards, which will guide CPA
practitioner. - FINANCIAL REPORTING STANDARDS COUNCIL (FRSC)
16. In charge of regulating the business operation of a partnership, corporation and
foundation. - SECURITIES AND EXCHANGE COMMISSION
17. In charge with the Collection of taxes. - BUREAU OF INTERNAL REVENUE (BIR)
18. In charge of regulating the Operation of banks and other financial institutions. -
BANGKO SENTRAL NG PILIPINAS
19. Refers to a financial statement that reports a company's assets, liabilities, and
shareholder equity at a specific point in time. - BALANCE SHEET
20. Tre the most liquid assets and can include Treasury bills and short-term certificates of
deposit, as well as hard currency. - CASH AND CASH EQUIVALENTS
21. Are equity and debt securities for which there is a liquid market. - MARKETABLE
SECURITIES
22. Refer to money that customers owe the company. - ACCOUNTS RECEIVABLE
23. Refers to any goods available for sale, valued at the lower of the cost or market price. -
INVENTORY
24. Represent the value that has already been paid for, such as insurance, advertising
contracts, or rent. - PREPAID EXPENSE
25. Are securities that will not or cannot be liquidated in the next year. - LONG-TERM
INVESTMENTS
26. Include land, machinery, equipment, buildings, and other durable, generally capital-
intensive assets. - FIXED ASSETS
27. Include non-physical (but still valuable) assets such as intellectual property and goodwill.
- INTANGIBLE ASSETS
28. Any money that a company owes to outside parties, from bills it has to pay to suppliers
to interest on bonds issued to creditors to rent, utilities and salaries. - LIABILITY
29. Due within one year and are listed in order of their due date. - CURRENT LIABILITIES
30. Are due at any point after one year. - LONG-TERM LIABILITIES
31. It is accumulated interest owed, often due as part of a past-due obligation such as late
remittance on property taxes. - INTEREST PAYABLE
32. It is salaries, wages, and benefits to employees, often for the most recent pay period. -
WAGES PAYABLE
33. Money received by a customer before the service has been provided or product
delivered. - CUSTOMER PREPAYMENTS
34. Dividends that have been authorized for payment but have not yet been issued. -
DIVIDENDS PAYABLE
35. It is debt obligations on invoices processed as part of the operation of a business that
are often due within 30 days of receipt. - ACCOUNTS PAYABLE
36. Includes any interest and principal on bonds issued. - LONG-TERM DEBT
37. Refers to the money a company is required to pay into its employees' retirement
accounts. - PENSION FUND LIABILLITY
38. The amount of taxes that accrued but will not be paid for another year. - DEFERRED
TAX LIABILITY
39. The money attributable to the owners of a business or its shareholders. -
SHAREHOLDERS EQUITY
40. Are the net earnings a company either reinvests in the business or uses to pay off debt. -
RETAINED EARNINGS
41. The stock a company has repurchased. - TREASURY STOCK
42. They usually prepare the financial statement. – ACCOUNTANT
43. It’s the most popular format to prepare a statement of financial position. It displays
information in the form of an accounting equation with assets on the left and liability and
equities on the right. - COMMON SIZE STATEMENT OF FINANCIAL POSITION
44. This format represents the performance of the three components over time. It shows
historical figures alongside the latest figures and the percentage change. -
COMAPARATIVE STATEMENT OF FINANCIAL POSITION
45. Components are presented in a single column, starting with assets and then equity and
liabilities. - VERTICAL STATEMENT OF FINANCIAL POSITION
46. A financial statement analysis technique that shows changes in the amounts of
corresponding financial statement items over a period of time. - HORIZONTAL
ANALYSIS
47. States financial statements in a comparable common-size format. - VERTICAL
ANALYSIS
48. It presents revenue, expenses, and net income. - INCOME STATEMENT
49. A financial document that a company issues under its balance sheet. - STATEMENT OF
STOCKHOLDES EQUITY
50. This includes the amount a reporting entity receives due to a transaction with its owners.
- SHARE CAPITAL
51. The amount that a company keeps aside after paying all the expenses and dividends. -
RETAINED EARNINGS
52. Acts as a bridge between the income statement and balance sheet by showing how
money moved in and out of the business. - STATEMENT OF CASH FLOWS
53. The principal revenue-generating activities of an organization and other activities that
are not investing or financing. - OPERATING ACTIVITIES
54. Any cash flows from the acquisition and disposal of long-term assets and other
investments not included in cash equivalents. - INVESTING ACTIVITIES
55. Any cash flows that result in changes in the size and composition of the contributed
equity capital or borrowings of the entity. - FINANCING ACTIVITIES
56. Inflows and outflows of cash and cash equivalents. - CASH FLOW
57. Cash on hand and demand deposits. - CASH BALANCE
58. Equivalents include cash held as bank deposits, short-term investments, and any very
easily cash-convertible assets. - CASH EQUIVALENTS
59. Typically includes the cash flows associated with sales, purchases, and other expenses.
- OPERATING CASH FLOW
60. Includes the acquisition and disposal of non-current assets and other investments not
included in cash equivalents. - INVESTING CASH FLOW
61. Activities that result in changes in the size and composition of the equity capital or
borrowings of the entity. - FINANCING CASH FLOW
62. It is a common measure used typically for DCF valuation. - FREE CASH FLOW
63. All individual instances of cash that are received or paid out are tallied up and the total is
the resulting cash flow. - DIRECT METHOD
64. The accounting line items such as net income, depreciation, etc. are used to arrive at
cash flow. - INDIRECT METHOD
65. It is used to evaluate a company’s liquidity and short-term debt paying capacity. -
CURRENT RATIO
66. Tells whether the company could pay all its current liabilities even if none of the
inventory sold. - QUICK RATIO
67. A measure of the number of times a company sold its average level of inventory during
the period. - INVENTORY TURNOVER
68. Provides a rough measure of the length of time it takes to acquire, sell and replace
inventory. - AVERAGE AGE OF INVENTORY
69. Measures the company’s ability to collect from credit. - ACCOUNTS RECEIVABLE
TURNOVER
70. Provides a rough approximation of the average time that it takes to collect receivables. -
AGE OF RECEIVABLLES
71. The average time period between buying the inventory and receiving its sales. -
OPERATING CYCLE
72. A financial ratio that measures the performance and efficiency of a business. - GROSS
PROFIT RATIO (GP RATIO)
73. Refers to a metric used by a company to determine how efficient a company’s
management at keeping operating costs low while at the same time. - OPERATING
RATIO
74. A ratio used to determine the efficiency at which a company converts its sales into
operating profit. - RETURN ON SALES
75. Measures how effectively a company can earn a return on its investment in assets. -
RETURN ON ASSETS RATIO
76. A measurement of how effectively a business uses equity. - RETURN ON EQUITY
(ROE)
ENUMERATION:
1. PRINCIPLES OF ACCOUNTING
- Revenue recognition principle
- MATCHING PRINCIPLE
- Historical cost principle
- CONSERVATISM PRINCIPLE
2. ASSUMPTIONS OF ACCOUNTING
- THE ECONOMIC ENTITY
- MONETARY MEASUREMENT
- ACCRUAL BASIS
- GOING CONCERN
- THE PERIOD ASSUMPTION
- FULL DISCLOSURE
FORMULAS:
1. DOLLAR AND PERCENTAGE CHANGES ARE COMPUTED BY USING THE
FOLLOWING FORMULAS:
- 1. Dollar change = Amount of the item in comparison year – Amount of the item in base
year
- 2. Percentage change = Data change / Amount of the item in base year X 100