Chapter 1 Flashcards
accounting
is a system that collects and processes(analyzes,measures,and records) financial information about an organization and reports the information to decision makers
Annual Report
a report prepared by corporate management that presents financial information including financial statements, a management discussion and analysis section, notes , and an independent auditor’s report
Assets
resources owned by a business
Auditor’s Report
a report by an independent outside auditor stating the auditor’s opinion as to the fairness of the presentation of the financial position and results of operations and their conformance with generally accepted principles
Balance Sheet
a financial statement that reports the assets and claims to those assets at a specific point in time
Asset=?
Liabilities + Stockholders’ Equity
Certified Public Accountant(CPA)
an individual who has met certain criteria and is thus allowed to perform audits of corporations
Common Stock
is the investment of cash and other assets in the business directly by the owners . The owners will receive a certificate as evidence of their ownership interest on the assets.
Corporation
a business organized as a separate legal entity owned by stockholders
Dividends
payments of cash from a corporation to its stockholders
Expenses
The costs of assets consumed or services used in the process of generating revenue
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
Liabilities
Amounts owed to creditors in the form of debts and and other obligations
Net Income
The amount by which revenues exceed expenses
Net Loss
the amount by which expenses exceed revenues
Notes to the financial statements
Notes clarify information presented in the financial statements and provide additional detail
Partnership
A business owned by two or more persons associated as partners
Retained Earnings
The amount of net income retained in the corporation
Retained earnings statement
A financial statement that summarizes the amounts and causes of changes in retained earnings for a specific time period
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
Sarbanes-Oxley Act (SOX)
Regulations passed by Congress to reduce unethical corporate behavior
Sole Proprietorship
A business owned by one person
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
Stockholders’ equity
The owners’ claim to assets
Net Income=?
Revenue-Expenses
Dividends
distribution of equity to the owners, Typically money received from the business to the owners. It is the owners share of the business profits .
interest income
extra amount of money that is paid by the borrower to the lender for use of the lender’s moeny
