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Account payable
A liability backed by the general reputation and credit standing of the debtor.
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Account receivable
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
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
The basic tool of accounting, measuring the resources of the business and the claims to those resources: Assets = Liabilities + Stockholdes' Equity.
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Asset
An economic resource that is expected to be of benefit in the future.
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Audit
An examination of a company's financial situation.
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Authorization
The acceptance by the state of the Corporate by-laws.
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Balance sheet
An entity's asset, liabilities, and stockholders' equity as of a specific date. Also called the STATEMENT OF FINANCIAL POSITION.
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Certified Management Accountant (CMA)
A licensed accountant who works for a single company.
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Certified Public Accountants (CPAs)
Licensed accountants who serve the general public rather then one particular company.
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Charter
Documents that gives the state's permission to form a corporation.
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Common stock
Represents the basic ownership of every corporation.
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Contributed capital
The amount invested in the corporation by its owners, the stockholders.
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Corporation
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.
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Cost principle
A principle that states that acquired assets and services should be recorded at their actual cost.
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Creditors
Those to whom a business owes money.
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Dividends
Distributions by a corporation to its stockholders.
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Entity
An organization or a section of an organization that, for accounting purposes, stands apart from other organizations and individuals as a separate economic unit.
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Equity
The claims of corporation's owners to the asset of the business. Also called SHAREHOLDERS EQUITY or STOCKHOLDERS' EQUITY or OWNERS' EQUITY.
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Expenses
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
The branch of accounting that focuses on information for people outside the firm.
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Financial Accounting Standards Board (FASB)
The private organization that determines how accounting is practiced in the United States.
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Financial statements
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)
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
This concept assumes that the entity will remain in operation for the foreseeable future.
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Income statement
Summary of an entity's revenues, expenses, and net income or net loss for a specific period. Also called the STATEMENT OF EARNINGS or the STATEMENT OF OPERATIONS.
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Liabilities
Economic obligations (dept) payable to an individual or an organization outside tge business.
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Limited-liability company
Company in which each member is only liable for his or her own actions or those under his or her control.
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Limited-liability partnership
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
The branch of accounting that focuses on information for internal decision makers of a business.
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Mutual agency
The ability of partners in a partnership to commit other partners and the business to contract.
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Net income
Excess of total revenues over total expenses. Also called NET EARNINGS or NET PROFIT.
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Net loss
Excess of total expenses over total revenues.
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Objective principle
Principle that asserts that data are verifiable and objective. Also called the RELIABILITY PRINCIPLE.
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Owners' equity
The claim of a corporation's owners to the assets of business. Also called SHAREHOLDERS' or STOCKHOLDERS' EQUITY.
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Paid-in capital
The amount invested in the corporation by its owners, the stockholders. Also called CONTRIBUTED CAPITAL.
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Partnership
A business with two or more owners and not organized as a corporation.
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Proprietorship
A business with a single owner.
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Reliability principle
Principle that asserts that data are verifiable and objective. Also called OBJECTIVITY PRINCIPLE.
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Retained earnings
The amount earned over the life of the business by income-producing activities and kept (retained) for use in the business.
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Revenue
Amount earned by delivering goods or services to customers. Revenues increas retained earnings.
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Shareholders
A person who owns stock in a corporation.
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Shareholders' equity
The claim of a corporation's owners to the assets of the bussiness. Also called OWNERS' or STOCKHOLDERS' EQUITY.
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Stable monetary unit concept
The concept that says that accountants assume that the dollar's purchasing power is stable.
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Statement of cash flow
Report of cash reciepts and cash payments during a period.
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Statement of earnings
Summary of an entity's revenues, expenses, and net income or net loss for a specific period. Also called INCOME STATEMENT or the STATEMENT OF OPERATIONS.
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Statement of financial position
An entity's assets, liabilities, and owners' equity as of a specific date. Also called the BALANCE SHEET.
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Statement of operations
Summary of an entity's revenues, expenses, and net income or net loss for a specific period. Also called the INCOME STATEMENT ir STATEMENT OF EARNINGS.
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Statement of retained earnings
Summary of the chamges in an entity's retained earnings during a specific period.
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Stocks
A document indicating ownership of a corporation. The holders of stock are called STOCKHOLDERS or SHAREHOLDERS.
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Stockholders
A person whi owns stock in a corporation. Also called SHAREHOLDER.
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Stockholders' equity
The claim of a corporation owners to the assets of the business. Also called OWNERS' EQUITY or SHAREHOLDERS' EQUITY.
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Transaction
An event that affects the financial position of a particular entity and can be measured and recorded reliably.
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