Chapter 1

an information and measurment system that identifies, records and communicates relevant, reliable and comparable information about an organization's business activites

the recording of transactions and events, either manually or electronically

not directly involved in running the organization, have limited access to an organization's information

area of accounting aimed at serving external users by providing them with general-purpose financial statements

those directly involved in managing and operating organizations, use info to help improve the efficiency and effectivness of an organization

the area of accounting that serves the decision-making needs of internal users

procedures set up to protect company property and equipment, ensure reliable accounting reports, promote efficency, and encourage adherence to company policies

4 broad areas of accounting

CPA

CMA

CIA

CB

CPP

PFS

CFE

CrFA

beliefs that distinguish right and wrong; the accepted standards of good and bad behavior

refers to a concern for the impact of actions on society, can include donations and programs

rules that specify acceptable accounting practices, aims to make information in financial statements releveant, reliable and comparable

government agency that has the legal authority to set GAPP, oversees proper use of GAPP by companies that raise money from the public through issuances of their stock and debt

independent group (consisting of 16 individuals from many countries) that identifies preferred accounting practices and encourages global acceptance: issues International Financial Reporting Standards (IFRS)

standards set by IASB, headquartered in London; refers broadly to all pronouncements of the IASB

system of interrelated objectives and fundamentals, disseminated by accounting regulators such as the FASB or IASB; intended to guide consistent standard setting and did accounting practitioners

basic assumptions, concepts and guidelines for preparing financial statements

detailed rules used in reporting business transactions and events

means that accounting information is based on actual cost

provides guidance on when a company must recoginze revenue (record revenue)

perscribes that a company must record its expenses incurred to generate the revenue

requires a company to report the details behind financial statements that would impact users decisions

means that accounting information reflects a preassumption the business will continue operating

means we can express transactions in money

presumes that the life of a company can be dvided into time periods, such as months and years

means that a business is accounted for seperately from it's owners or other business entities

business owned by 1 person; no legal requirements to start; seperate entity for accounting purposes, but it isn't a seperate legal entity from it's owner

business owned by 2 or more people; no legal requirements to start; not legally seperate legal entity from it's owner

LP

LLP

LLC

business legally seperate from it's owners

perscribes that only information that would infuence the decisions of a reasonable person need be disclosed

perscribes that only information with benifits of disclosure greater than the cost of providing it need be disclosed