Glossary of Accounting 203
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- What is financial accounting?
- The branch of accounting that focuses on information for people outside the firm.
- What is managerial accounting?
- The branch of accounting that focuses on information for internal decision makers.
- What does FASB stand for?
- Financial Accounting Standards Board
- What does the FASB do?
- It is a private organization that determines how accounting is practiced in the United States.
- What does AICPA stand for?
- American Institute of Certified Public Accountants
- What is IMA stand for?
- Institute of Management Accountants
- What groups does the FASB work with?
- IMA, AICPA, and SEC
- What does GAAP stand for?
- Generally Accepted Accounting Principles
- What is GAAP?
- The rules that govern public accounting principles.
- What is a CMA?
- A certified management accountant, licensed accountant that works for a single company.
- What is an audit?
- An examination of a companies financial situation.
- What is a proprietorship?
- A firm with a single owner that is liable for the actions of the firm.
- What is a partnership?
- Two or more individuals that are viewed as liable for the actions of the firm.
- What is a Corporation?
- A business owned by stockholders created through an article of incorporation, the corporation becomes the legal enity.
- What is a stockholder or shareholder?
- A person that owns stock in a corporation.
- What is the: life of a corporation?
- What is an: entity?
- An organization or a section of an organization that viewed as a seperate economic unit.
- What is the: entity concept?
- The idea that an accounting entity stands apart as a seperate accounting unit.
- What is the: reliability/objectivity principle?
- The idea that data used for accounting should be based on the "most reliable data available"
- What is the: cost principle?
- The idea that acquired assets and services should be recorded at actual (historical) cost.
- What is the: Going-Concern Concept?
- Under the assumption of continued operation, assets will be used for their intended purpose.
- What is the: stable monetary unit concept?
- The idea that accountants assume that a currency is stable and do not consider inflation.
- What are: assets?
- Economic resources that are expected to be of benifit in the future.
- What is the: accounting equation?
- Assets = Liabilities + Owner's Equity
- What are: liabilities?
- An economic obligation (debt) payable to a party outside the business
- What is: owner's equity?
- The claim of a business owner to assets of the business or capital
- What is: accounts receivable?
- a promise to receive cash from a party that has received goods or services
- What is: notes receivable?
- a written promise for a future collection of cash
- What is: accounts payable?
- A liability backed by the credit standing of the debtor
- What is: notes payable?
- a written promise of future payment
- What is: Revenue
- Increase in owners equity through delivery of goods or services
- What are: Owner Withdrawls
- Amounts removed from the business by the owner, causing a decrease in stockholders equity
- What are: Expenses
- A decrease in owner's equity through use of assets or an increase in liabilities
- What is a: Transaction
- Any event that effects the financial position of a firm
- What is the: Balance Sheet
- The statement of financial position is a snapshot of the assets, liabilites and owners equity in a firm at a certian time.
- What is: Net Income
- Total Revenue - Total Expense = (Net Earnings,net income, net profit)
- What is: Net Loss
- if net earnings are negative
- What is: Income Statement
- The win/loss record for the company over a period of time. Summary of: revenue, expenses, net income, net loss. (Statement of Earnings)(Statement of Operations)
- What is: Statement of Owner's Equity
- Summary of changes in owner's equity over a period of time
- What is: Statement of Cash Flows
- Reports Cash receipts and cash payments over a during a period of time.
- What is a proper heading for a financial statement?
- Name of Firm
Name of Financial Statement
Date or Time Covered in the Statement
- GAAP are formulated by the...
- Financial Accounting Standards Board (FASB)
- Which type of organization is owned by its stockholders?
- Which accounting concept states that we should record transactions at amounts that can be verified?
- Cost Principle
- The balance sheet report...
- Financial position on a specific date
- The income statement reports...
- Results of operations for a specific period
- What is accounting?
- The information system that measures business activities, processed into reports and then communicated to decision makers.
- What are financial statements?
- Documents that report on a business in monetary amounts providing information to decision makers
- What is a CPA?
- A licensed accountant that serves the puclib rather than one particular company.
- What is a shareholder?
- A person that owns a stake in a company
- What is a stockholder?
- A person that owns a stake in a company
- What is capital?
- The claim of a business owner to the assets of a company... also known as stockholders equity.
- matching principle
- Guide to accounting for expenses.
1. Identify expenses during period
2. Match them against all revenues over the same period.
- prepaid expense
- Advance of payments of expenses
- revenue principle
- The basis for recording revenues; tells accountants when to record revenue and the amount of revenue to record.
- time-period concept
- Ensures that information is reported at regular intervals.
- unearned revenue
- Revenue that has been recorded by
- accrual accounting
- Accounting that records the impact of a businesss event as it occurs, regardless of whether the transaction affected cash.
- Cash-basis accounting
- Records transactions only when cash is received or paid.
- Adjusting entry
- An entry that attempts to adjust earnings and expenses so that statements reflect time-periods properly.
- Types of adjusting entries
- Prepaid and Accrual
1. Prepaid expenses
3. Accrued expenses
4. Accrued Revenues
5. Unearned revenues
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