General Accounting Terms Flashcards
Account Payable
The oral or implied promise to pay off debts arising from credit purchases
Account Receivable
An asset; a promise to receive cash in the future from customers to whom the business has sold goods or services.
Audit
Conducted by independent accountants who express an opinion on whether or not the financial statements fairly reflect the economic events that occurred during the accounting period.
Balance Sheet
A list of an entity’s assets, liabilities and owner’s equity or shareholder’s equity as of a specific date. It is also called the statement of financial position.
Bookkeeping
A procedural element of accounting; the keeping of the financial records and the recording of financial information.
Cash Flow Statement
Reports cash receipts and cash payments classified according to the entity’s major activities: operating, investing, and financing.
Cost-Benefit Constraint
An accounting constraint that says the benefits of the information produced should not exceed the costs of producing the information
Cost principle of measurement
States that assets and services are recorded at their purchase coast and that the accounting period of the asset continues to be based on cost rather than current market value.
Comparable
A qualitative characteristic of accounting information that says financial statements should be able to be measured against results in previous years or other businesses in the same industry.
Dividends
Distributions by a corporation to its shareholders.
Economic entity assumption
The accounting assumption that an organization or a section of an organization stands apart from other organizations and individuals as a separate economic unit for accounting purposes.
Going concern assumption
An accounting assumption that the business will continue operating in the foreseeable future.
Income Statement
A list of an entity’s revenues, expenses, and net income or net loss for a specific period. It is also called the statement of earnings or statement of operations.
Materiality constraints
A piece of information that would affect a decision maker’s decision.
Revenue
Amounts earned from delivering goods or services to customers. The increase in owner’s equity that is earned by delivering goods or services to customers or clients.
Shareholder’s Equity
The account name for owner’s equity when the business is a corporation. In this case, the owners are called shareholders.
Stable monetary unit assumption
Accountants’ basis for ignoring the effect of inflation and making no adjustments for the changing value of the dollar.
Statement of Owner’s Equity
A summary of the changes in an entity’s owner’s equity during a specific period.
What is the difference between an accountant and an auditor?
What is the difference between financial accounting and managerial accounting
Financial accounting provides information to the people outside the company, such as creditors, investors, stakeholders, and government agencies.
Meanwhile, managerial accounting provides information for internal decision makers, such as company executives, and department managers.
Overall, financial accounting focuses on external users, and managerial accounting focuses on internal users.
What are the differences between ASPE and IFRS?
What are the similarities between ASPE and IFRS?
They are both prepared under the authority of the Accounting Standards Board and are published as part of the CPA Canada Handbook.
