Chapter 1 Flashcards
Accounting
A system of providing ‘quantitative information, primarily financial in nature, about economic entities that is intended to be useful in making economic decisions.’
American Institute of Certified Public Accountants (AICPA)
The professional organization of certified public accountants in the United States.
Balance Sheet
Document which reports the resources of a company (the assets), the company’s obligations (the liabilities), and the owners’ equity, which represents how much money has been invested in the company by its owners.
Bookkeeping
The preservation of a systematic, quantitative record of an activity.
Certified Public Accountant
A person who has taken a minimum number of college-level accounting classes, has passed the dreaded CPA exam, and has met other requirements set by his or her state.
Financial Accounting
The name given to accounting information provided for and used by external users.
Financial Statements
The three primary financial information documents: the balance sheet, income statement, and statement of cash flows.
Income Statement
This document reports the amount of net income earned by a company during a period, with annual and quarterly income statements being the most common.
Internal Revenue Service (IRS)
The government agency responsible for tax collection and tax law enforcement.
International Accounting Standards Board (IASB)
An independent, international body formed to develop worldwide accounting standards.
International Financial Reporting Standards (IFRS)
The accounting standards produced by the IASB.
Managerial Accounting
The name given to accounting systems designed for internal users.
Public Company Accounting Oversight Board (PCAOB)
A private, non-profit organization that effectively serves as an arm of the SEC in registering, inspecting, and disciplining the auditors of all publicly traded companies.
Statement of Cash Flows
This document reports the amount of cash collected and paid out by a company in the following three types of activities: operating, investing, and financing.
