Accounting 101-Chapter 1-Accounting as a form of communication

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  1. Business
    All of the activities necessary to provide the members of an economic system with goods and services
  2. Business Entity
    An organization operated to earn a profit.
  3. Sole proprietorship
    A form of organization with a single owner.
  4. Economic entity concept
    The assumption that a single, identifiable unit must be accounted for in all situations.
  5. Partnership
    A business owned by two or more individuals; the organization form often used by accounting firms and law firms.
  6. Corporation
    A form of entity organized under the laws of a particular state; ownership evidenced by shares of stock.
  7. Share of stock
    A certificate that acts as evidence of ownership in a corporation.
  8. Bond
    A certificate that represents a corporation's promise to repay a certain amount of money and interest in the future.
  9. Nonbusiness entity
    An organization operated for some purpose other than to earn a profit.
  10. Liability
    An obligation of a business.
  11. Capital stock
    Indicates the owner's contributions to a corporation.
  12. Stockholder(Shareholder)
    One of the owners of a corporation
  13. Creditor
    Someone to whom a company or person has a debit.
  14. Asset
    A future economic benefit
  15. Revenue
    An inflow of assets resulting from the sale of goods and services
  16. Expense
    An outflow of assets resulting from the sale of goods and services.
  17. Accounting
    The process of identifying, measuring, and communication economic information to various users.
  18. Management Accounting
    The branch of accounting concerned with providing management with information to facilitate planning and control.
  19. Financial Accounting
    The branch of accounting concerned with the preparation of financial statements for outsider use.
  20. Owner's Equity
    The owner's claims on the assets of an entity
  21. Stockholder's equity
    The owners' equity in a corporation
  22. Retained earnings
    The part of owners' equity that represents the income earned less dividends paid over the life of an entity.
  23. Balance sheet
    The financial statement that summarizes the assets, liabilities, and owners' equity at a specific point in time.
  24. Income Statement
    A statement that summarizes revenues and expenses.
  25. Net income
    The excess of revenues over expenses.
  26. Statement of retained earnings
    The statement that summarizes the income earned and dividends paid over the life of a business.
  27. Dividends
    A distribution of the net income of a business to its owners.
  28. Statement of cash flows
    The financial statement that summarizes a company's cash receipts and cash payments during the period from operating, investing, and financing activities.
  29. Cost principle
    Assets are recorded at the cost to acquire them.
  30. Going concern
    The assumption that an entity is not in the process of liquidation and that it will continue indefinitely.
  31. Monetary unit
    The yardstick used to measure amounts in financial statements; the dollar in the United States.
  32. Time period
    An artificial segment of the calendar used as the basis for preparing financial statements.
  33. Generally accepted accounting principles (GAAP)
    The various methods, rules, practices, and other procedures that have evolved over time in response to the need to regulate the preparation of financial statements.
  34. Securities and Exchange Commission (SEC)
    The federal agency with ultimate authority to determine the rules for preparing statements for companies whose stock is sold to the public.
  35. Financial Accounting Standards Board(FASB)
    The group in the private sector with authority to set accounting standards.
  36. American Institute of Certified Public Accountants (AICPA)
    The professional organization of certified public accountants.
  37. Certified Public Accountant (CPA)
    The designation for an individual who has passed an uniform exam administered by the AICPA and has met other requirements as determined by individual states.
  38. Public Company Accounting Oversight Board(PCAOB)
    A five-member body created by an act of Congress in 2002 to set auditing standards.
  39. International Accounting Standards Board (IASB)
    The organization formed to develop worldwide accounting standards.
  40. Auditing
    The process of examining the financial statements and the underlying records of a company to render an opinion as to whether the statements are fairly represented.
  41. Sarbanes-Oxley Act
    An act of Congress in 2002 intended to bring reform to corporate accountability and stewardship in the wake of a number of major corporate scandals.
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Accounting 101-Chapter 1-Accounting as a form of communication
Chapter 1
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