Chapter 15 Flashcards
Accounting
Process of measuring, interpreting, and communicating financial information to support internal and external business decision making
Accounting Cycle
set of activities involved in converting information and individual transactions into financial statements.
Accounting Equation
formula that states that assets must always equal the sum of liabilities and owners’ equity.
Accrual Accounting
accounting method that records revenues and expenses when they occur, not necessarily when cash actually changes hands.
Asset
anything of value owned by a company.
Balance Sheet
statement of a company’s financial position—what it owns and claims against its assets—at a particular point in time.
Budget
company’s plan for how it will raise and spend money during a given period of time.
Double-Entry Bookkeeping
process by which accounting transactions are entered; each individual transaction always has an offsetting transaction.
Financial Accounting Standards Board (FASB)
organization responsible for evaluating, setting, or modifying GAAP in the United States.
Foreign Corrupt Practices Act
federal law that prohibits U.S. citizens and companies from bribing foreign officials in order to win or continue business.
Generally Accepted Accounting Principles (GAAP)
principles that encompass the conventions, rules, and procedures for determining acceptable accounting practices at a particular time.
Income Statement
financial record of a company’s revenues, expenses, and profits over a period of time.
International Accounting Standards Board (IASB)
organization established in 1973 to promote worldwide consistency in financial reporting practices.
International Financial Reporting Standards (IFRS)
standards and interpretations adopted by the IASB.
Liability
anything owed to creditors—the claims of a company’s creditors.
