Accounting Vocabulary Chapter One

A liability backed by the general reputation and credit standing of the debtor.

A promise to recieve cash from customers to whom the business has sold goods or for whom the business has performed services.

The information system that measures business activities, processes that information into reports, and communicates the results to decision makers.

The basic tool of accounting, measuring the recources of he business and the claims to those resources: Assets = Liabilities + Owner's Equity.

An economic resource that is expected to be of benefit in the future.

An examination of a company's financial situation.

An entity's assets, liabilities, and owner's equity as of a specific date. Also called the statement of financial position.

Representation of ownership investment by an owner of a proprietorship.

A licensed accountant who works for a single company.

Licensed accountants who serve the general public rather than one particular company.

A business owned by stockholders. A corporation begins when the state approves its articles of incorporation and the first share of stock is issued. It is a legal entity, an "artificial person," in the eyes of the law.

A principle that states that acquired assets and sevices should be recorded at their actual cost.

Someone to whom a business owes money

An organization or section of an organization that, for accounting purposes, stands apart from other organizations and individuals as separate economic unit.

The claim of a proprietorship's owner to the assets of the business. Also called owner's equity.

Decrease in equity that occurs from using assets or increasing liabilities in the course of delivering goods or services to customers.

The branch of accounting hat focuses on information for peopleoutside the firm.

The private organization that determines how accounting is practiced in the United States.

Documents that report on a business in monetary amounts, providing information to help people make informed business decisions.

Accounting guidelines, formulated by the Financial Accounting Standards Board, that govern how accountants measure, process, and communicate financial information.

This concept assumes that the entity will remain in operation for the forseeable future.

Summary of an entity's revenues, expenses, and net income or net less for a specific period. Also called the statement of earnings or the statement of operations.

Economic obligations (debts) payable to an indiviual or an organization outside the business.

Company in which each member is only liable for his or her own actions or thise under his or her control.

Company in which each partner is only liable for his or her own actions or those under his or her control.

The branch of accounting that focuses on information for internal decision makers of a business.

The ability of partners in a partnership to commit other partners and the business to a contract.

Excess of total revenues over total expenses. Also called net earnings or net profit.

Excess of total expenses over total revenues.

Principle hat asserts that data are verifiable and objective. Also called the reliability principle.

The claim of an owner to the assets of the business.

A business with two or more owners that is not organized as a corporation.

A business with a single owner.

Principle that asserts that data are verifiable and objective. Also called the objectivity principle.

Amounts earned by delivering goods or services to customers. Revenues increase retained earnings.

A person who owns stock in a corporation.

The concept that says that accountants assume that the dollar's purchasing power is stable.

Report of cash reciepts and cash payments during a period.

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.

An entity's assets, liabilities, and owner's equity as of a specific date. Also called the balance sheet.

Summary of an entity's revenues, expenses, and net income or net loss for a specific period. Also called the income statement or statement of earnings.

Summary of the changes in an owner's capital account during a specific period.

A document indicating ownership of a corporation. The holders of stock are called stockholders or shareholders.

A person who owns stock in a corporation. Also called a shareholder.

The claim of a corporation's owners to the assets of the business. Also called owner's equity or shareholders' equity.

An event that affects the financial position of a particular entity and can be measured and recorded reliably.