Final Flashcards
The preservation of a systematic, quantitative record of an activity.
Bookkeeping
A system that provides quantitative information, primarily financial in nature, about economic entities that is intended to be useful in making economic decisions.
Accounting
Accounting systems designed for internal use.
Managerial Accounting
Accounting information provided to, and used by, external users.
Financial Accounting
The general purpose information used by financial accounting that includes the balance sheet, income statement, and statement of cash flows.
Financial Statements
A listing of an organization’s assets, liabilities, and owner’s equity at a certain point in time.
Balance Sheet
Reports the amount of net income earned by a company during a specific period.
Income statement
The excess of a company’s revenues over its expenses.
Net Income
Reports the amount of cash collected and paid out by a company in the following types of activities: operating, investing, and financing.
Statement of Cash Flows
A private body established in 1973 and supported by the joint efforts of the US business community, financial analysts, and practicing accountants.
Financial Accounting Standards Board (FASB)
An independent federal government agency responsible for protecting investors, maintaining the fair and orderly functioning of the US securities market, and facilitating capital formation.
Securities and Exchange Commission (SEC)
The set of principles and practices that a corporation uses to regulate the relationship between the shareholders and the managers hired by the board of directors.
Corporate Governance
A person that has taken a minimum number of college-level accounting classes, has passed the CPA exam, and has met other requirements set by their state.
Certified Public Accountant (CPA)
Created by the Sarbanes-Oxley Act, it is a private, non-profit organization that serves as an arm of the SEC in registering, inspecting, and disciplining the auditors of all publicly-traded companies.
Public Company Accounting Oversight Board (PCAOB)
An independent group of experts that set accounting standards for preparing, auditing, or using financial reports, and in accounting education.
International Accounting Standards Board (IASB)
Issued by the IASB, they bring consistency to accounting standards and practices, regardless of the country of origin.
International Financial Reporting Standards
Probable future economic benefits obtained or controlled by a particular entity as a result of past transactions or events.
Asset
Probable future sacrifices of economic benefits arising from present obligations as a result of past actions or events.
Liabilities
The residual interest in the assets of an entity that remain after deducting liabilities.
Owner’s Equity
The value of assets given in exchange for stock in the entity.
Paid-In Capital
Represent the portion of stockholder’s equity that has not been paid to the owners as dividends.
Retained Earnings
The stock that a company repurchases; it is shown as a subtraction in the stockholder’s equity section of the balance sheet.
Treasury Stock
Income that stems from increased assets due to market prices or exchange rates.
Accumulated Other Comprehensive Income
A balance sheet that distinguishes between current and long-term assets and/or liabilities.
Classified Balance Sheet
The idea that personal finances are kept separate from business finances.
The Entity Concept
An accounting technique that values an asset for balance sheet purposes at the price paid for the asset at the time of its acquisition.
Historical Cost Convention
The amount of assets created through the performance of business operations.
Revenue
The amount of assets consumed from the performance of business operations.
Expense
Refers to the money that is made on activities outside of the normal business operations of a company.
Gains
Refers to the money that is lost on activities outside of the normal business operations of a company.
Losses
Tells the owner of a stock how much one share of their stock is worth.
Earnings-per-Share
The concept that a business should report the financial results of its activities over a standard time period, such as monthly, quarterly, or annually.
Time Period Concept
A GAAP that determines the specific conditions in which revenue is recognized or accounted for.
Revenue Recognition
Activities involved in producing and selling goods and services and thus compromise the day-to-day business of a company.
Operating Activities
Activities that include the purchase and sale of land, buildings, and equipment.
Investing Activities
Activities whereby cash is obtained from, or repaid to, owners and creditors.
Financing Activities
An independent examination of the financial statements prepared by an organization.
External Audit
Cash and other assets that are expected to be converted to cash within one year.
Current Assets
Current assets composed of publicly traded stocks and bonds that are to be sold within one year.
Investment Securities
Assets that have no physical or tangible characteristics that include agreements, contracts, patents, or trademarks.
Intangible Asset
The difference between assets and liabilities in a corporation.
Stockholder’s Equity
A financial instrument, such as an option or future, that derives its value from the movement of a price, exchange rate, or an interest rate associated with some other item.
Derivative
Arises when a corporation has subsidiaries that are not 100-percent owned by an organization.
Non-Controlling Interest
The process of assigning a dollar amount to an item once it has been determined that the item should be recognized on financial statements.
Valuation
The process of determining how an economic event impacts financial statements.
Transaction Analysis
A contract made on the promise of an exchange in the future, such as salary.
Executory Contract
What two items are revealed on the balance sheet?
Ownership and Debt
What are the five steps, in order, of the decision cycle?
Prepare Financial Statements Analyze Financial Statements Gather Information Make Decision Implement Decision
Which two values affect the measurement of net income?
Operating Expenses and Ordinary Gains and Losses
Which two items are included in a multi-step income statement?
Gross Profit and Income from Operations
