Acc Test 1
Terms
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- The information system that measures business activities, processes that information into reports and financial statements, and communicates the results to decision makers
- Accounting
- Business documents that report financial information about a business entity to decision makers
- Financial statements
- The branch of accounting that provides information to people outside the firm
- Financial accounting
- The branch of accounting that generates information for the internal decision makers of a business, such as top executives
- Management accounting
- A business with a single owner
- Proprietorship
- An association of two or more persons who co-own a business for profit
- Partnership
- A business owned by stockholders. A corporation is a legal entity, an "artificial person" in the eyes of the law
- Corporation
- A person who owns stock in a corporation. Also called a shareholder.
- Stockholder
- Another name for stockholder
- Shareholder
- Group elected by the stockholders to set policy for a coporation and to appoint its officers
- Board of directors
- Accounting guidelines, formulated by the Financial Accounting Standards Board, that governs how accounting is practical
- Generally accepted accounting principles (GAAP)
- An organization or a section of an organization that, for accounting purposes, stands apart from other organizations and individuals as a separate economic unit
- Entity
- The accounting principle that ensures that accounting records and statements are based on the most reliable data available. Also called the objectivity principle
- Reliablility principle
- Principle that states that assets and services shuld be recorded at their actual cost
- Cost principle
- Holds that the entity will remain in operation for the foreseeable future
- Going-concern concept
- The basis for ignoring the effect of inflation in the accounting records, based on the assumption that the dollar's purchasing power is relavtively stable
- Stable-monetary-unit concept
- The most basic tool of accounting: Assets= Liabilities + Owner's Equity
- Accounting equation
- An economic resource that is expected to be of benefit in the future
- Asset
- An economic obligation (a debt) payable to an individual of an organization outside the business
- Liability
- The cliam of the owners of a business to the assets of the business. Also called capital, stockholder's equity, or net assets
- Owner's Equity
- Another name for the owner's equity of a business
- Capital
- Money and any medium of exchange that a bank accepts at face value
- Cash
- The merchandise that a company sells to customers
- Merchandise inventory
- Long-lived assets, such as land, buildings, and equipment, used in the operation of the business.
- Property, plant, and equipment
- A liabiltiy backed by the general reputation and credit standings of the debtor
- Account payable
- A liability evidenced by a written promise to make a future payment
- Note payable
- A liability that falls due beyond one year from the date of the financial statements
- Long-term debt
- The stockholders' owernership interest in the assets of a corporation
- Stockholders' equity
- The amouint of stockholders' equity that stockholders have contributed to the corporation
- Paid-in capital
- The most basic form of capital stock
- Common stock
- The amount of stockholders' equity that the corporation has earned through profitable operation and has not given back to stockholders
- Retained earnings
- Increase in retained earnings from delivering goods or services to customers or clients
- Revenue
- Decrease in retained earnings that results from poerations; thae cost of doing business; opposite of revenues
- Expense
- Excess of total revenues over total expenses
- Net Income
- Excess of total expenses over total revenues
- Net loss
- Distributions (usually cash) by a corporation to its stockholders
- Dividends
- A financial statement listing an entitiy's revenues, expenses, and net income or net loss for a specific period
- Financial statements
- Summary of the changes in the retained earinings of a corporation during a specific period
- Statement of retained earnings
- Lis of an entity's assets, liabitilties, and owner's equity as of a specific date
- Balance sheet
- An asset that is expected to be converted to cash, sold, or consumed during the next 12 months, or within the business's normal operating cycle if longer than a year
- Current asset
- A debt due to be paid within one year or within the entity's operating cycle if the cycle is longer than a year
- Current liability
- Activities that create revenue or expense in the entity's major line of business; a section of the statement of cash flows.
- Operating activities
- Activities that increase or decrease the long-term assets available to the business; a section of the statement of cash flows
- Investing activities
- Activities that obtain from investors and creditors the cash needed to launch and sustain the business; a section of the statemnt of cash flows
- Financing Activities
- Reports cash receipts and cas payments classified accoring to the entity's major activities: operating, investing, and financing
- Statement of cash flows