Accounting

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accounting

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the recording, classifying, summarizing and interpreting of financial events and transactions to provide management and others the information they need to make good decisions---help evaluate financial condition

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inventory

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items kept in stock for resale: ex food on grocery shelf, books in book store

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Managerial accounting

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used to provide information and analyses to managers within the organization to assist them in decision making---CMA= certified management accountant

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5 accounting areas

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1)managerial and
2)financial,
3)auditing,
4)tax accounting, and
5)governmental and not-for-profit accounting

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Financial Accounting

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accounting info and analyses prepared for people outside the organization

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auditing

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the job of reviewing and evaluationg the records used to prepare a company's financial statements

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tax accoutant

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trained in tax law and is responsible for preparing tax returns or developing tax strategies

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Governament and not-for-profit accounting

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involves working for nonprofit generating organizations according to a duly approved budget

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bookkeping

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the recording and organizing of business transactions for accountants to summarize and classify

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journal

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the record book or computer program where accounting data are first entered

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ledger

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a specialized accounting book or computer program-organizes and stores info in one spot

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financial statement

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a summary of all the transactions that have occured over a particular period--indicates a firm's financial health and stability

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balance sheet

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what the company owns and owes on a certain day

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income statement

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what a firm sells its products for and what its selling costs are over a specific period

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statement of cash flows

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shows the difference between cash coming in and cash going out

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the fundamental accounting equation

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assets= liabilities + owners equity

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falance sheet

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financial statement that reports a firm's financial condition at a specific time (made up of assets, liabilities, and owners equity)

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assets

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things of value owned by a firm (tangible and intangible)

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liquidity

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how fast an asset can be converted into cash

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current assets

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items that can or will be converted into cash within one year (inventory)

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fixed assets

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long term assets that are relatively permanent (land, buildings)

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intangible assets

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long term assests that have no real physical form but have value (patents, trademark)

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liabilities

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what the business owes to others (debts)

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current liabilities

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debts due in one year or less

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long-term liabilities

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debts not due for a year or more

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owners equity

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the amount of the business that belongs to the owners minus any liabilites owed by the business