Comprehensive Financial & Managerial Accounting
Terms – Key Concepts, Definitions & Exam Questions
with 100% Verified Answers
2026–2027
,Depreciation method Deprecation method that recognizes expense rapidly in
the early stages of an asset's life.
Accounts receivable Expected future cash receipt arising from permitting a
customer to buy and pay later, typically a relatively
small balance due within a short time period.
Accounting Service based profession that provides reliable and
relevant financial information useful in making
decisions.
Accounting equation Expression of the relationship between the assets and
the claims on those assets.
Accounting event Economic occurrence that changes a company's
assets, liabilities, or equity.
Accounting period Span of time covered by the financial statements,
normally one year, but may be a quarter, a month, or
some other time span.
Accounts Record of classified and summarized transaction data;
component of financial statement elements.
Accounts receivable turnover Financial ratio that measures how fast accounts
receivable are turned into cash; computed by dividing
sales by accounts receivable.
Accrual Recognition of events before exchanging cash.
Accrual accounting Accounting system that recognizes revenues when
earned and expenses when incurred regardless of
when the related cash is exchanged.
, Accrued expenses Expenses that are recognized before cash is paid. An
example is accrued salaries expense.
Accrued interest Interest revenue or expense that is recognized before
cash has been exchanged.
Accumulated conversion factor Factor used to convert a series of future cash flows into
their present value equivalent.
Allocation Process of dividing a total cost into parts and
apportioning the parts among the relevant cost objects.
Accumulated depreciation Contra asset account that indicates the sum of all
depreciation expense recognized for an asset since the
date of acquisition.
Allocation base Cost driver used as the basis for the allocation process.
Allocation rate Factor used to allocate or assign costs to a cost object.
Allowance for doubtful accounts Contra asset account that contains an amount equal to
the accounts receivable that are expected to be
uncollectible.
Allowance method of accounting for Method of accounting for uncollectible accounts in
uncollectible accounts which uncollectible accounts are estimated and
expensed in the same period as the corresponding
sales.
American Institute of Certified Public National association that serves the educational and
Accountants (AICPA) professional interests of members of the public
accounting profession.
Terms – Key Concepts, Definitions & Exam Questions
with 100% Verified Answers
2026–2027
,Depreciation method Deprecation method that recognizes expense rapidly in
the early stages of an asset's life.
Accounts receivable Expected future cash receipt arising from permitting a
customer to buy and pay later, typically a relatively
small balance due within a short time period.
Accounting Service based profession that provides reliable and
relevant financial information useful in making
decisions.
Accounting equation Expression of the relationship between the assets and
the claims on those assets.
Accounting event Economic occurrence that changes a company's
assets, liabilities, or equity.
Accounting period Span of time covered by the financial statements,
normally one year, but may be a quarter, a month, or
some other time span.
Accounts Record of classified and summarized transaction data;
component of financial statement elements.
Accounts receivable turnover Financial ratio that measures how fast accounts
receivable are turned into cash; computed by dividing
sales by accounts receivable.
Accrual Recognition of events before exchanging cash.
Accrual accounting Accounting system that recognizes revenues when
earned and expenses when incurred regardless of
when the related cash is exchanged.
, Accrued expenses Expenses that are recognized before cash is paid. An
example is accrued salaries expense.
Accrued interest Interest revenue or expense that is recognized before
cash has been exchanged.
Accumulated conversion factor Factor used to convert a series of future cash flows into
their present value equivalent.
Allocation Process of dividing a total cost into parts and
apportioning the parts among the relevant cost objects.
Accumulated depreciation Contra asset account that indicates the sum of all
depreciation expense recognized for an asset since the
date of acquisition.
Allocation base Cost driver used as the basis for the allocation process.
Allocation rate Factor used to allocate or assign costs to a cost object.
Allowance for doubtful accounts Contra asset account that contains an amount equal to
the accounts receivable that are expected to be
uncollectible.
Allowance method of accounting for Method of accounting for uncollectible accounts in
uncollectible accounts which uncollectible accounts are estimated and
expensed in the same period as the corresponding
sales.
American Institute of Certified Public National association that serves the educational and
Accountants (AICPA) professional interests of members of the public
accounting profession.
