Accounting Chapter 1
Terms
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- What is accounting?
- an information system that measures business activities, processes data into reports, and communicates results to people.
- Fianacial Statement
- Business documents that report financial information about a business entity to decision makers.
- Who uses Accounting Information? (4 answers)
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Individuals
Investors and Creditors
Taxing Authorities
Non Profit Organizations - Financial Accoutning
- provides information to people outside of the firm
- Management accounting
- generates inside information for the internal decision makers of a business
- Proprietorship
- A business with a single owner
- Partnership
- An association of two or more persons who co-own a business for profit
- Corporation
- A business owned by stockholders. A legal entity, "artificial person" in the eyes of the law.
- Stockholders
- A person that owns stock in a corporation
- Stock
- Shares in which owners equity of a corporation is divided.
- Board of Directors
- group elected by the stockholders to set policies for a corporation and to appoint officers.
- Entity
- organization or a section of an organization that stands apart from other organizations and individuals as a seperate economic unit.
- Reliability Principle aka Objectivity principle
- ensures that accounting records and statements are based on the most reliable data available.