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ACC1010-900/901 > Chapter 1 > Flashcards

Chapter 1 Flashcards

1
Q

Accounting

A

Information and measurement system that identifies, records, and communicates relevant information about a company’s business activities.

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2
Q

Accounting equation

A

Equality involving a company’s assets, liabilities, and equity; Assets = Liabilities + Equity; also called the balance sheet equation.

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3
Q

Assets

A

Resources a business owns or controls that are expected to provide current and future benefits to the business.

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4
Q

Audit

A

Analysis and report of an organization’s accounting system, its records, and its reports using various tests.

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5
Q

Auditors

A

Individuals hired to review financial reports and information systems; internal auditors assess a company’s internal controls, while external auditors evaluate the fairness of financial statements.

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6
Q

Balance sheet

A

Financial statement listing types and dollar amounts of assets, liabilities, and equity at a specific date.

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7
Q

Bookkeeping

A

Part of accounting involving the recording of transactions and events, either manually or electronically; also called recordkeeping.

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8
Q

Business entity assumption

A

Principle requiring a business to be accounted for separately from its owner(s) and any other entity.

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9
Q

Common stock

A

Corporation’s basic ownership share; also referred to as capital stock.

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10
Q

Conceptual framework

A

The basic concepts that underlie the preparation and presentation of financial statements, guiding the development of standards and resolving accounting issues.

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11
Q

Corporation

A

A business that is a separate legal entity under state or federal laws; owners are referred to as shareholders or stockholders.

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12
Q

Cost constraint

A

The idea that the benefit of a disclosure exceeds the cost of making that disclosure.

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13
Q

Cost principle

A

Accounting principle prescribing financial statement information to be based on actual costs incurred in transactions.

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14
Q

Cost-benefit constraint

A

The notion that the benefit of a disclosure exceeds the cost of that disclosure.

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15
Q

Data analytics

A

The process of analyzing data to identify meaningful trends; in accounting, it helps in making informed business decisions.

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16
Q

Data visualization

A

Graphical presentation of data to help people understand its significance and make inferences.

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17
Q

Equity

A

Owner’s claim on the assets of a business after deducting liabilities; also called net assets or owner’s equity.

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18
Q

Ethics

A

Codes of conduct by which actions are judged as right or wrong, fair or unfair, honest or dishonest.

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19
Q

Events

A

Happenings that affect an organization’s financial position and can be reliably measured.

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20
Q

Expanded accounting equation

A

Expanded version of Assets = Liabilities + Equity; for a noncorporation, Equity = Owner’s capital − Owner’s withdrawals + Revenues − Expenses.

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21
Q

Expense recognition (or matching) principle

A

Prescribes expenses to be reported in the same period as the revenues they helped generate.

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22
Q

Expenses

A

Outflows or using up of assets as part of operations to generate sales.

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23
Q

External transactions

A

Exchanges of economic value between one entity and another entity.

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24
Q

External users

A

Persons using accounting information who are not directly involved in running the organization.

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25
Q

Financial accounting

A

Area of accounting primarily serving external users.

26
Q

Financial Accounting Standards Board (FASB)

A

Independent group responsible for setting accounting rules.

27
Q

Full disclosure principle

A

Prescribes financial statements to report all relevant information about an entity’s operations and financial condition.

28
Q

Generally accepted accounting principles (GAAP)

A

Rules specifying acceptable accounting practices.

29
Q

Going-concern assumption

A

Principle prescribing financial statements to reflect the assumption that the business will continue operating.

30
Q

Income statement

A

Financial statement subtracting expenses from revenues to yield net income or loss over a period; includes any gains or losses.

31
Q

Internal controls or internal control system

A

Policies and procedures used to protect assets, ensure reliable accounting, promote efficient operations, and ensure adherence to policies.

32
Q

Internal transactions

A

Activities within an organization that affect the accounting equation.

33
Q

Internal users

A

Persons directly involved in managing an organization and using its accounting information.

34
Q

International Accounting Standards Board (IASB)

A

Group identifying preferred accounting practices and encouraging global acceptance; issues International Financial Reporting Standards (IFRS).

35
Q

International Financial Reporting Standards (IFRS)

A

Set of international standards explaining how transactions and events are reported; issued by IASB.

36
Q

Liabilities

A

Creditors’ claims on assets; involves probable future payment of assets, products, or services due to past transactions.

37
Q

Limited liability company (LLC)

A

Business form combining features of a corporation and a limited partnership; provides limited liability to members and allows active participation in management.

38
Q

Managerial accounting

A

Area of accounting serving decision-making needs of internal users; also called management accounting.

39
Q

Measurement principle

A

Prescribes financial statement information and transactions to be based on relevant measures of valuation; also called the cost principle.

40
Q

Members

A

Owners of an LLC, with rights and responsibilities specified in the operating agreement and state regulations.

41
Q

Monetary unit assumption

A

Principle assuming transactions and events can be expressed in money units.

42
Q

Net income

A

Amount earned after subtracting all necessary expenses from sales for a period; also called income, profit, or earnings.

43
Q

Net loss

A

Excess of expenses over revenues for a period.

44
Q

Owner investments

A

Assets put into the business by the owner.

45
Q

Partnership

A

Unincorporated association of two or more persons to pursue a business for profit as co-owners.

46
Q

Proprietorship

A

Business owned by one person not organized as a corporation; also called sole proprietorship.

47
Q

Recordkeeping

A

Part of accounting involving the recording of transactions and events; also called bookkeeping.

48
Q

Retained earnings

A

Cumulative income less losses and dividends.

49
Q

Return on assets (ROA)

A

Ratio reflecting operating efficiency; calculated as net income divided by average total assets for the period.

50
Q

Revenue recognition principle

A

Principle prescribing that revenue is recognized when goods or services are delivered to customers.

51
Q

Revenues

A

Gross increase in equity from business activities earning income; also called sales.

52
Q

Securities and Exchange Commission (SEC)

A

Federal agency setting reporting rules for organizations selling ownership shares to the public.

53
Q

Shareholders

A

Owners of a corporation; also called stockholders.

54
Q

Shares

A

Equity of a corporation divided into ownership units; also called stock.

55
Q

Sole proprietorship

A

Business owned by one person that is not a corporation; also called proprietorship.

56
Q

Statement of cash flows

A

Financial statement listing cash inflows and outflows during a period, categorized by operating, investing, and financing activities.

57
Q

Statement of retained earnings

A

Report of changes in retained earnings over a period, accounting for net income, dividends, and any prior period adjustments.

58
Q

Stock

A

Equity of a corporation divided into ownership units; also called shares.

59
Q

Stockholders

A

Owners of a corporation; also called shareholders.

60
Q

Time period assumption

A

Assumption that an organization’s activities can be divided into specific time periods such as months, quarters, or years.

ACC1010-900/901 (3 decks)

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