accounting language Flashcards
account payable
The liability created by a purchase on account
account receivable
A claim against the customer created by selling merchandise or services on account.
accounting
An information system that provides reports to users about the economic activities and condition of a business.
accounting equation
Assets = Liabilities + Owner’s Equity
asset
An economic resource controlled by an entity as a result of a past transaction and from which future economic benefit may be obtained
balance sheet
statement of financial position
A list of the assets, liabilities, and owner’s equity as at a specific date.
benefit versus cost constraint
or cost constraint.
The trade-off that exists between the accuracy of financial information and the cost to produce that information.
business
An organization in which basic resources (inputs), such as materials and labour, are assembled and processed to provide goods or services (outputs) to customers
business entity assumption
An assumption of accounting that limits the economic data in the accounting system to data related directly to the activities of the business.
business transaction
An economic event or condition that directly changes an entity’s financial condition or directly affects its results of operations
cash flow statement
A summary of the cash receipts and cash payments for a specific period of time
comparability
A preferred charac¬teristic of accounting information whereby information for one company is comparable to information prepared for another organization
corporation
A business organized under provincial, territorial, or federal charter as a separate legal entity
cost principle
or historical cost basis
In financial statements, the recognition of transactions at the amount of cash paid or received
ethics
Moral principles that guide the conduct of individuals
expenses
Assets used up or services consumed in the process of generating revenues.
faithful representation
or representational faithfulness
Recording an event in a manner that reflects the substance of the transaction
fees earned
Revenue from providing services
fees earned on account
Revenue from providing services when payment is received at a later date.
financial accounting
The branch of accounting that is concerned with recording transactions using generally accepted accounting principles (GAAP) for a business or other economic unit and with a periodic preparation of various statements from such records.
financial statements
Financial reports that summarize the effects of events on a business.
general-purpose financial statements
A type of financial accounting report that is distributed to external users. The term “general purpose” refers to the wide range of decision-making needs that the reports are designed to serve.
going concern assumption
An assumption that the business will continue for the foreseeable future.
income statement or
statement of comprehensive income
A summary of the revenues and expenses for a specific period of time
liability
An obligation to give up either services or assets
management (or managerial) accounting
The branch of accounting that provides accounting information for internal users’ decision making
manufacturing business
A business that changes basic inputs into products that are sold to customers
materiality
Information is considered material if omitting it or misstating it could influence decisions that users make on the basis of financial information of an entity
net income
The amount by which revenues exceed expenses
merchandising business
A business that purchases products from other businesses and sells them to customers.
net loss
The amount by which expenses exceed revenues
owner’s equity
Assets less liabilities, being the amount that the owner is entitled to
partnership
An unincorporated business form consisting of two or more persons conducting business as co-owners for profit
prepaid expenses
Items such as supplies that will be used in the business in the future.
private accounting
The field of accounting whereby accountants are employed by a business or a not-for-profit organization
private enterprises
Profit-oriented organizations that do not issue shares or bonds through stock exchanges
profit
The difference between the amounts received from customers for goods or services provided and the amounts paid for the inputs used to provide the goods or services.
proprietorship
A business owned by one individual
public accounting
The field of account¬ing where accountants and their staff provide services on a fee basis
publicly accountable enterprises
Companies with shares or bonds listed on stock exchanges and other organizations, such as credit unions or investment dealers, that impact large or diverse groups of stakeholders
relevance
Ability of financial informa¬tion to be helpful to investors and oth¬ers making financial decisions
report form
The form of balance sheet that presents the liabilities and owner’s equity sections below the assets section
revenue recognition principle
Revenue transactions that meet the recognition criteria, normally when goods are pro¬vided or services are performed
revenues
Increases in owner’s equity as a result of selling services or products to custom
sales
The total amount charged cus¬tomers for merchandise sold, including cash sales and sales on account
service business
A business provid¬ing services rather than products to customers.
statement of changes in equity
statement of owner’s equity statement of retained earnings
For companies reporting under IFRS, a summary of the changes in the owner’s equity that have occurred during a specific period of time
statement of comprehensive income
under IFRS, a summary of the revenues and expenses for a specific period of time,
timeliness
Ability of financial information to be produced on a timely basis so that it is helpful to investors and others making financial decisions
understandability
Ability of information to improve the reader’s comprehension of financial information, such as notes to the financial statements
verifiability
A characteristic of financial information such that the information can be confirmed by source documents
4 financial statement
Income statement
Statement of owners equity
Balance statement
Cash flow statement
ALORE
Assets Liabilities Owners equity Revenue Expenses
