Accounting Chapter 1 Glossary Terms Flashcards
What is accounting?
Information system that identifies, records, communicates economic events of organizations to interested users
What is an annual report?
Report by corporate management presenting financial information including financial statements, management and analysis, notes, and an independent auditor’s report
What are assets?
Resources owned by a business
What is an auditor’s report?
A report prepared by independent outside auditor stating auditor’s opinion about fairness of presentation of financial position and results of operations and conformance with generally accepted principles
What is the balance sheet?
Financial statement reporting assets and claims to those assets at a specific point in time
What is the basic accounting equation?
Assets=Liabilities+Stockholders’ Equity
What is a CPA?
Certified Public Accountant-Individual who has met certain criterion that allows him to audit corporations
What is common stock?
Total amount paid in by stockholders for the shares they purchase
What is a corporation?
Business organized as a separate legal entity owned by stockholders
What are dividends?
Payments of cash from a corporation to its stockholders
What are expenses?
The cost of assets consumed or services used in the process of generating revenues
What is the income statement?
A financial statement that reports a company’s revenues and expenses and resulting net income or net loss for a specific period of time
What are liabilities?
Amounts owed to creditors in the form of debts and other obligations
What is MD&A
Management Discussion and Analysis-A section of the annual report that presents management
s views on the company’s ability to pay near-term obligations, its ability to fund operations and expansion, and its results of operations
What is net income?
The amount by which revenues exceed expenses
What is net loss?
The amount by which expenses exceed revenues
What are notes to the financial statements?
Notes clarify information presented in the financial statements and provide additional detail
What is a partnership?
A business owned by two or more persons associated as partners
What are retained earnings?
The amount of net income retained in the corporation
What is the retained earnings statement?
A financial statement that summarizes the amounts and causes of changes in retained earnings for a specific time period
What is revenue?
The increase in assets or decrease in liabilities resulting from the sale of goods or the performance of services in the normal course of business
What is SOX?
Sarbanes-Oxley Act-Regulations passed by Congress to reduce unethical corporate behavior
What is a sole proprietorship?
A business owned by one person
What is the statement of cash flows?
A financial statement that provides financial information about the cash receipts and cash payments of a business for a specific period of time
What is stockholder’ equity?
The owners’ claim to assets
