Chapter 1 Flashcards
accounting
A set of concepts and techniques that are used to measure and report financial information about an economic unit.
accounting equation
A financial relationship at the heart of the accounting model: Assets = Liabilities + Owners’ Equity
assets
The economic resources owned by an entity; entailing probable future benefits to the entity.
auditing
The examination of transactions and systems that underlie an organization’s financial statements with the goal or reporting thereon.
balance sheet
A financial statement that presents a firm’s assets, liabilities, and owners’ equity at a particular point in time.
certified public accountant (CPA)
An individual who is licensed by a state to practice public accounting.
corporation
A form of business organization where ownership is represented by divisible units called shares of stock.
dividends
Amounts paid from profits of a corporation to shareholders as a return on their investment in the stock of the entity.
expenses
The costs incurred in producing revenues.
financial accounting
An area of accounting that deals with external reporting to parties outside the firm; usually based on standardized rules and procedures.
Financial Accounting Standards Board
An organization charged with producing standards for financial reporting in the USA.
financial statements
Core financial reports that are prepared to represent the financial position and results of operations of a company.
historical cost principle
The concept that many transactions and events are to be measured and reported at acquistion cost.
income statement
A financial statement that summarizes the revenues, expenses, and results of operations for a specified period of time.
internal auditor
A person within an organization who reviews and monitors the controls, procedures, and information of the organization.
International Accounting Standards Board
An organization charged with producing accounting standards with global acceptance.
liabilities
Amounts owed by an entity to others.
managerial accounting
An area of accounting concerned with reporting results to managers and others who are internal to an organization.
net income
The excess of revenues over expenses for a designated period of time.
net loss
The excess of expenses over revenues for a designated period of time.
owner investments
Resources provided to an organization by a person in exchange for a position of ownership in the organization.
owner’s equity
The residual of assets minus liabilities, representing the collective interest or position of the entity’s owners.
partnership
A non-corporation representing an association of two or more persons organized to carry out a business plan for a profit motive.
public accounting
Accounting activities provided by a person to the general public, typically relating to audit, tax and similar services.
