Week 1 Flashcards
Accounting is an information system that
- Measures business activities
- Processes the information into reports
- Communicates results to decision makers
What’s the difference between financial and managerial accounting
Financial provides information to external decision makers, managerial provides to internal decision makers
What is a CPA
Certified Public account
What is a CGMA
Chartered Global Management Accountant. Has advanced knowledge in finance, operation, strategy, and management.
What is a CMA
Certified Management Accountant, specialize in accounting a financial management knowledge
What is a CFP
Certified Financial Planner. Certified professionals who work with individuals on budgeting, retirement planning, and other personal goals.
What are 3 fields of accounting
Public, Private, Government
What is a creditor
Any business or individual to whom a business owes money
The process of examining data, identifying trends, and drawing conclusions
Data analytics
What is data visualization
The presentation of data, trends, and conclusions in graphical charts
A privately funded organization that oversees the creation and governance of accounting standards
FASB, Financial Accounting Standards Board.
U.S. governmental agency that oversees the U.S. financial markets.
SEC, Securities and Exchange Commission
The guidelines for accounting information are called
Generally Accepted Accounting Principles (GAAP)
Standards for firms who do significant business in other countries
IFRS, International Financial Reporting Standards
Who publishes the IFRS
International Accounting Standards Board
Describe the economic entity assumption
States an organization stands apart as it’s own economic entity.
States that acquired assets and services should be recorded at their actual cost and not fair value
Cost principle
Represents the price that would be received if the asset was sold
Fair Value
Assumes the entity will remain in operation for the foreseeable future
Going concern assumption
The assumption that requires items on the financial statements to be measured in terms of monetary unit
monetary unit assumption
Requires management to review internal controls
Sarbanes-Oxley Act (SOX)
Monitors independent accountants who audit public firms
Public Company Accounting Oversight Board (PCAOB)
What is the accounting equation
Assets = liabilities + equity
an economic resource that is expected to benefit the business in the future and something the business owns or has control of
Asset
Debts that are owed to creditors
Liabilities
The owners claim to the asset
equity
Represents the basic ownership of a corporation
Common stock
Equity earned by profitable companies not distributed to stock holders
Retained earning
A distribution of a corporation’s earning to stockholders
dividends
How do you calculate equity
Common stock - dividends + revenue - expenses
An event that can affect the financial position of the business and be measured
transaction
Short term liability that will be paid in the future
Accounts payable
What are the 3 steps to analyzing a transaction
- Identify the accounts and account types
- Decide if each account increases or decreases
- Determine if the accounting equation is in balance
The right to receive cash in the future for goods or services performed
Accounts receivable
Business documents that are used to communicate information needed to make business decisions.
Financial statements
What are the four maind financial statements
- Income Statement
- Statement of retained earnings
- Balance Sheet
- Statement of cash flows
Reports the net income/loss of the business for a specific time. Only includes revenues and expenses
income statement
Reports how the company’s retained earnings balance changed for a specific period of time. May be included in the Statement of Stockholders equity
Statement of retained earnings
Reports on the assets, liabilities and stockholders’ equity of the business as a of a specific date. Gives a snapshot of the health of the organization.
Balance Sheet
Reports on a business’ cash receipts and cash payments for a specific period
Statement of cash flows
