Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
73 Cards in this Set
- Front
- Back
|
Accounting |
The information system that identifies, records, and communicates the economic events of an organization to interested users |
|
|
Assets |
resources a business owns |
|
|
balance sheet |
a financial statement that reports the assets, liabilities, and owner's equity at a specific date |
|
|
Assets=Liabilities+Owner's Equity |
Basic Accounting Equation |
|
|
bookkeeping |
a part of accounting that involves only the recording of economic events |
|
|
convergence |
the process of reducing the difference between GAAP and IFRS |
|
|
corporation |
a business organized as a separate legal entity under state corporation law, having ownership divided into transferable shares of stock |
|
|
cost principle |
an accounting principle that states companies should record assets at their cost |
|
|
drawings |
withdrawal of cash or other assets from an unincorporated business for the personal use of the owners |
|
|
economic entity assumption |
an assumption that requires that the activities of the entity be kept separate and distinct from the activities of its owners and all other economic entities |
|
|
ethics |
standards of conduct by which one's actions are judged as right or wrong, honest or dishonest, fair or unfair |
|
|
Assets=Liabilities+Owner's Capital-Owner's Drawings+Revenues-Expenses |
expanded accounting equation |
|
|
expenses |
the costs of assets consumed or services used in the process of earning revenue |
|
|
fair value principle |
an accounting principle stating that assets and liabilities should be reported at fair value (the price received to sell an asset or settle a liability) |
|
|
faithful representation |
numbers and descriptions match what really existed or happened- it is factual |
|
|
financial accounting |
the field of accounting that provides economic and financial information for investors, creditors, and other external users |
|
|
Financial Accounting Standards Board (FASB) |
a private organization that establishes generally accepted accounting principles |
|
|
Generally Accepted Accounting Principles (GAAP) |
common standards that indicate how to report economic events |
|
|
income statement |
financial statement that presents the revenues and expenses and resulting net income or net loss of a company for a specific period of time |
|
|
International Accounting Standards Board (IASB) |
an accounting standard-setting body that issues standards adopted by many countries outside of the United States |
|
|
investments by owners |
assets an owner puts into the business |
|
|
liabilities |
creditor claims on total assets |
|
|
managerial accounting |
the field of accounting that provides internal reports to help users make decisions about their companies |
|
|
monetary unit assumption |
an assumption stating that companies include in the accounting records only transaction data that can be in terms of money |
|
|
net income |
the amount by which revenues exceed expenses |
|
|
net loss |
the amount by which expenses exceed revenue |
|
|
owner's equity |
the ownership claim on total assets |
|
|
owner's equity statement |
a financial statement that summarizes the change in owner's equity for a specific period of time |
|
|
partnership |
a business owned by two or more persons associated as partners |
|
|
proprietorship |
a business owned by one person |
|
|
relevance |
financial information that is capable of making a difference in a decision |
|
|
revenues |
the gross increase in owner's equity resulting from business activities entered into for the purpose of earning incom |
|
|
Sarbanes-Oxley Act of 2002 (SOX) |
law passed by Congress in 2002 intending to reduce unethical corporate behavior |
|
|
Securities and Exchange Commission (SEC) |
a governmental agency that oversees US financial markets and accounting standards-setting bodies |
|
|
statement of cash flows |
a financial statement that summarizes information about the cash inflows and cash outflows for a specific period of time |
|
|
transactions |
a economic events of a business that are recorded by accountants |
|
|
account |
a record of increases and decreases in a specific asset, liability, or owner's equity item |
|
|
chart of accounts |
a list of accounts and the account numbers that identify their location in the ledger |
|
|
compound entry |
a journal entry that involves three or more accounts |
|
|
credit |
right side of a account |
|
|
debit |
left side of an account |
|
|
double-entry system |
a system that records in appropriate accounts the duel effects of each transaction |
|
|
general journal |
the most basic form of journal |
|
|
general ledger |
a ledger that contains all assets, liabilities, and owner's equity accounts |
|
|
journal |
an accounting record in which transactions are initially recorded in chronological order |
|
|
journalizing |
the entering of transaction data in the journal |
|
|
ledger |
the entire group of accounts maintained by a company |
|
|
normal balance |
an account balance on the side where an increase in the account is recorded |
|
|
posting |
the procedure of transferring journal entries to the ledger accounts |
|
|
simple entry |
a journal entry that involves only two accounts |
|
|
T account |
the basic form of an account |
|
|
Three-column form of account |
a form with columns for debit, credit, and balance amount in an account |
|
|
Trial balance |
a list of accounts and their balances at a given time |
|
|
accrual-based accounting |
accounting basis in which companies record transactions that change a company's financial statement in the periods in which the events occurred |
|
|
accruals |
adjusting entries for other accrued revenues of accrued expenses |
|
|
accrued expenses |
expenses incurred but not yet paid in cash or recorded |
|
|
accrued revenues |
revenues earned but not yet received in cash or recorded |
|
|
adjusted trial balance |
a list of accounts and their balances after the company has made all the adjustments |
|
|
adjusted entries |
entries made at the end of an accounting period to ensure that companies follow the revenue recognition and expense recognition principle |
|
|
book value |
the difference between the cost of a depreciable asset and its related accumulated depreciation |
|
|
calendar year |
an accounting period that extends from Jan. 1 to Dec. 31 |
|
|
Cash-basis accounting |
accounting basis in which companies record revenue and when they receive cash and an expense when they pay cash |
|
|
contra asset account |
an account offset against an asset account on the balance sheet |
|
|
deferrals |
adjusting entries for either prepaid expenses or unearned service revenue |
|
|
depreciation |
the allocation of the cost of an asset to expense over its useful life in a rational and systematic manner |
|
|
expense recognition principle (matching principle) |
the principle that companies match efforts (expenses) with accomplishments (revenues) |
|
|
fiscal year |
an accounting period that is one year in length |
|
|
interim periods |
monthly or quarterly accounting time periods |
|
|
prepaid expenses |
expenses paid in cash that benefit more than one accounting period and that are recorded as assets |
|
|
revenue recognition principle |
the principle that companies recognize revenue in the accounting period in which it is earned |
|
|
time period assumptions |
an assumption that accountants can divide the economic life of a business into artificial time periods |
|
|
unearned revenues |
cash received and recorded as liabilities before revenue is earned |
|
|
useful life |
the length of service of a long-lived asset |
