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Acc Test 1


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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
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
An association of two or more persons who co-own a business for profit
A business owned by stockholders. A corporation is a legal entity, an "artificial person" in the eyes of the law
A person who owns stock in a corporation. Also called a shareholder.
Another name for stockholder
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
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
An economic obligation (a debt) payable to an individual of an organization outside the business
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
Money and any medium of exchange that a bank accepts at face value
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
Decrease in retained earnings that results from poerations; thae cost of doing business; opposite of revenues
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
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

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