MIE 201 TEST 5 STUDY GUIDE
accounting - Answers - the recording, measurement, and interpretation of financial
information
certified public accountant (CPA) - Answers - an individual who has been state certified
to provide accounting services ranging from the preparation of financial records and the
filing of tax returns to complex audits of corporate financial records
forensic accounting - Answers - accounting that is fit for legal review, involves analyzing
financial documents in search of fraudulent entries or financial misconduct
private accountants - Answers - accountants employed by large corporations,
government agencies, and other organizations to prepare and analyze their financial
statements
certified management accountants (CMAs) - Answers - private accountants who, after
rigorous examination, are certified by the Institute of Management Accountants and who
have some managerial responsibility
bookkeeping - Answers - often mistaken for accounting but is typically limited to the
routine, day-to-day recording of business transactions
managerial accounting - Answers - the internal use of accounting statements by
managers in planning and directing the organization's activities
cash flow - Answers - the movement of money through an organization over a daily,
weekly, monthly, or yearly basis
budget - Answers - an internal financial plan that forecasts expenses and income over a
set period of time
annual report - Answers - summary of a firm's financial information, products, and
growth plans for owners and potential investors
assets - Answers - a firm's economic resources, or items of value that it owns, such as
cash, inventory, land, equipment, buildings, and other tangible and intangible things
liabilities - Answers - debts that a firm owes to others
owner's equity - Answers - equals assets minus liabilities and reflects historical values
accounting equation - Answers - assets = liabilities + owner's equity
, double-entry bookkeeping - Answers - a system of recording and classifying business
transactions that maintains the balance of the accounting equation
accounting cycle - Answers - the four-step procedure of an accounting system:
examining source documents, recording transactions in an accounting journal, posting
recorded transactions, and preparing financial statements
journal - Answers - a time-ordered list of account transactions
ledger - Answers - a book or computer file with separate sections for each account
trial balance - Answers - a summary of the balances of all the accounts in the general
ledger
generally accepted accounting principles (GAAP) - Answers - a different set of
accounting principles or rules manufacturing firms, service providers, and nonprofit
organizations use upon which the public accounting profession has agreed
equivalent terms for revenues - Answers - sales
goods or services sold
equivalent terms for gross profit - Answers - gross income
gross earnings
equivalent terms for operating income - Answers - operating profit
earnings before interest and taxes (EBIT)
income before interest and taxes (IBIT)
equivalent terms for income before taxes (IBT) - Answers - earnings before taxes (EBT)
profit before taxes (PBT)
equivalent terms for net income (NI) - Answers - earnings after taxes (EAT)
profit after taxes (PAT)
equivalent terms for income available to common stockholders - Answers - earnings
available to common stockholders
income statement - Answers - a financial report that shows an organization's profitability
over a period of time-month, quarter, or year
revenue - Answers - the total amount of money received from the sale of good or
services, as well as from related business activities
cost of goods sold - Answers - the amount of money a firm spent to buy or produce the
products it sold during the period to which the income statement applies
accounting - Answers - the recording, measurement, and interpretation of financial
information
certified public accountant (CPA) - Answers - an individual who has been state certified
to provide accounting services ranging from the preparation of financial records and the
filing of tax returns to complex audits of corporate financial records
forensic accounting - Answers - accounting that is fit for legal review, involves analyzing
financial documents in search of fraudulent entries or financial misconduct
private accountants - Answers - accountants employed by large corporations,
government agencies, and other organizations to prepare and analyze their financial
statements
certified management accountants (CMAs) - Answers - private accountants who, after
rigorous examination, are certified by the Institute of Management Accountants and who
have some managerial responsibility
bookkeeping - Answers - often mistaken for accounting but is typically limited to the
routine, day-to-day recording of business transactions
managerial accounting - Answers - the internal use of accounting statements by
managers in planning and directing the organization's activities
cash flow - Answers - the movement of money through an organization over a daily,
weekly, monthly, or yearly basis
budget - Answers - an internal financial plan that forecasts expenses and income over a
set period of time
annual report - Answers - summary of a firm's financial information, products, and
growth plans for owners and potential investors
assets - Answers - a firm's economic resources, or items of value that it owns, such as
cash, inventory, land, equipment, buildings, and other tangible and intangible things
liabilities - Answers - debts that a firm owes to others
owner's equity - Answers - equals assets minus liabilities and reflects historical values
accounting equation - Answers - assets = liabilities + owner's equity
, double-entry bookkeeping - Answers - a system of recording and classifying business
transactions that maintains the balance of the accounting equation
accounting cycle - Answers - the four-step procedure of an accounting system:
examining source documents, recording transactions in an accounting journal, posting
recorded transactions, and preparing financial statements
journal - Answers - a time-ordered list of account transactions
ledger - Answers - a book or computer file with separate sections for each account
trial balance - Answers - a summary of the balances of all the accounts in the general
ledger
generally accepted accounting principles (GAAP) - Answers - a different set of
accounting principles or rules manufacturing firms, service providers, and nonprofit
organizations use upon which the public accounting profession has agreed
equivalent terms for revenues - Answers - sales
goods or services sold
equivalent terms for gross profit - Answers - gross income
gross earnings
equivalent terms for operating income - Answers - operating profit
earnings before interest and taxes (EBIT)
income before interest and taxes (IBIT)
equivalent terms for income before taxes (IBT) - Answers - earnings before taxes (EBT)
profit before taxes (PBT)
equivalent terms for net income (NI) - Answers - earnings after taxes (EAT)
profit after taxes (PAT)
equivalent terms for income available to common stockholders - Answers - earnings
available to common stockholders
income statement - Answers - a financial report that shows an organization's profitability
over a period of time-month, quarter, or year
revenue - Answers - the total amount of money received from the sale of good or
services, as well as from related business activities
cost of goods sold - Answers - the amount of money a firm spent to buy or produce the
products it sold during the period to which the income statement applies
