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Account Payable
page 15
A liability backed by general reputation and credit standing of the debtor.
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Account Receivable
page 15
A promise to receive cash from customers to whom the business has sold goods or for whom the business has performed services
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Accounting
page 2
The information system that measures business activities, processes that information into reports, and communicates the results to decision makers.
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Accounting Equation
page 10
The basic tool of accounting, measuring the resources of the business and the claims to those resources:
Assets = Liabilities + Owner's Equity.
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Asset
page 5
An economic resource that is expected to be of benefit in the future.
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Audit
page 4
An examination of a company's financial situation.
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Balance Sheet
page 28
An entity's assets, liabilities, and owner's equity of a specific date. Also called the Statement of Financial Position.
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Capital
page 11
Representation of ownership investment by an owner of a proprietorship.
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Certified Management Accountant (CMA)
Page 4
A licensed accountant who works for a single company.
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Certified Public Accountants (CPAs)
Page 4
Licensed accountants who serve the general public rather than one particular company.
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Corporation
Page 6
A business owned by stockholders. A corporation begins when the state approves its articles and the first share of stock has been issued. It is a legal entity, an "artificial person," in the eyes of the law.
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Cost principle
Page 9
A principle that states that acquired assets, and services should be recorded at their actual cost.
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Creditor
page 3
Someone to whom a business owes money.
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Entity
Page 9
An organization or a section of an organization that, for accounting purposes, stands apart from other organizations and individuals as a seperate economic unit.
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Equity
page 10
The claim of a proprietorship's owner to the assets of the business.
Also called Owner's Equity.
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Expenses
page 12
Decrease in equity that occurs from using assets or increasing liabilities in the course of delivering goods or services to customers.
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Financial Accounting
Page 3
The branch of accounting that focuses on information for people outside the firm.
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Financial Accounting Standards Board (FASB)
page 4
The private organization that determines how accounting is practed in the United States.
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Financial Statements
Page 18
Documents that report on a business in monetary amounts, providing information to help people make informed business decisions.
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Generally Accepted Accounting Principles (GAAP)
Page 4
Accounting guidelines, formulated by the Financial Accounting Standards Board, that govern how accountants measure, process, and communicate financial information.
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Going-Concern Concept
Page 10
This concept assumes that the entity will remain in operation for the forseeable future.
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Income Statement
Page 20
Summary of an entity's revenues, expenses, and net income or net loss for a specific period. Also called the Statement of Earnings or Statement of Operation.
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Liabilities
Page 10
Economic obligations (debts) payable to an individulal or an organization outside the business.
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Limited-Liability Company
Page 6
Company in which each partner is only liable for his or her own actions or those under his or her control.
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Limited-Liability Partnership
Page 6
Company in which each partner is only liable for his or her own actions or those under his or her control.
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Management Accounting
Page 3
The branch of accounting that focuses on information for internal decision makers of a business
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Mutual Agency
Page 8
The ability of partners in a partnership to commit other partners and the business to a contract.
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Net Income
Page 12
Excess of total revenues over total expenses. Also called Net Earnings or Net Profit.
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Net Loss
Page 12
Excess of total expenses over total revenues.
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Objectivity Principle
Page 9
Principal that asserts that data are verifiable and objective. Also called the Reliablility Principle.
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Owner's Equity
Page 10
The claim of an owner to the assts of the business.
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Partnership
Page 6
A business with two or more owners that is not organized as a corporation.
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Proprietorship
Page 6
A business with a single owner.
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Reliablility Principle
Page 9
Principle that asserts that data are verifiable and objective. Also called the Objectivity Principle.
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Revenue
Page 11
Amounts earned by delivering goods or services to customers. Revenues increase retained earnings.
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Shareholder
Page 6
A person who owns stock in a corporation.
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Stable Monetary Unit Concept
Page 10
The concept that says that accountants assume that the dollar's purchasing power is stable.
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Statement of cash flows
page 20
Report of cash receipts and cash payments during a period.
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Statement of Earnings
Page 21
Summary of an entity's revenues, expenses, and net income or net loss for a specific period. Also called the Income Statement or the Statement of Operations
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Statement of Financial Position
page 21
An entity's assets, liabilities and owner's equity as of a specific date.
Also called the balance sheet
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Statement of Operations
Page 21
Summary of an entity's revenues, expenses, and net income or net loss for a specific period. Also called the income statemetn or statement of earnings.
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Statement of Owner's Equity
page 18
Summary of the changes in an owner's capital account during a specific period.
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Stock
page 7
A document indicating ownership of a corporation. The holders of stock are called Stockholders or Shareholders.
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Stockholder
page 6
a person who owns stock in a corporation
Also called a shareholder
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Stockholder's Equity
page 12
The claim of a corporation's owners to the assets of the business.
Also called owner's equity or shareholder's equity.
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Transaction
Page 13
An event that affects the financial position of a particular entity and can be measured and recored reliably.
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