Acounting 212: Chapter 1

Front 1

Account Payable

Back 1

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

Front 2

Accounting

Back 2

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

Front 3

Accounting Equation

Back 3

Assets = Liabilities + Owners Equity

Front 4

Assets

Back 4

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

Front 5

Balance Sheet

Back 5

List of an entity's assets, liabilites, and owner's equity as of a special date. Also called the statement of financial position.

Front 6

Board of Directors

Back 6

Group elected by the stockholders to set policy for a corporation and to appoint its officers.

Front 7

Capital

Back 7

Another name for the owner's equity of a business.

Front 8

Cash

Back 8

Money and any medium of exchange that a bank excepts at face value.

Front 9

Common Stock

Back 9

The most basic form of capital stock.

Front 10

Corporation

Back 10

A business owned by stockholders. A corporation is a legal entity, an "artificail" person in the eys of the law.

Front 11

Cost Principle

Back 11

Principle that states that assets and services should be recorded at their actual cost.

Front 12

Current Assets

Back 12

An asset that is expected to be converted to cash, sold, or consumed during the next 12 months, or within the business's normal operating cycle if longer than a year.

Front 13

Current Liabilities

Back 13

A debt due to be paid within one year or within the entity's operating cycle if the cycle is longer than a year.

Front 14

Dividends

Back 14

Distribution (usually cash) by a corporation to its stockholders.

Front 15

Entity

Back 15

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

Front 16

Expenses

Back 16

Decrease in retained earnings that results from operations; the cost of doing business; opposite of revenues.

Front 17

Financial Accounting

Back 17

The branch of accounting that provides information to people outside of the firm.

Front 18

Financial Statements

Back 18

Business documents that report financial information about a business entity to decision makers.

Front 19

Financing Activities

Back 19

Activities that obtain from investors and creditors the cash needed to launch and sustain the business; a section of the statement of cash flows.

Front 20

note payable

Back 20

A liability evidenced by a written promise to make a future payment.

Front 21

Generally Accepted Accounting Principles (GAAP)

Back 21

Accounting guidelines, formulated by the Financial Accounting Standards Board, that govern how accounting is practical.

Front 22

Going-Concern Concept

Back 22

Holds that the entity will remain in operation for the foreseeable future.

Front 23

Income Statement

Back 23

A financial statement listing an entity's revenues, expenses, and net income or net loss for a specific period. Also called the statement of operations.

Front 24

Investing Activities

Back 24

Activities that increase or decrease the long-term assets available to the business; a section of the statment of cash flows.

Front 25

Liabilities

Back 25

An economic obligation (a debt) payable to an individual or an organization outside of the business.

Front 26

Long-Term Debt

Back 26

A liability that falls due beyond one year from the date of the financial statements.

Front 27

Management Accounting

Back 27

The branch of accounting that generates information for the internal decision makers of a business, such as top executives.

Front 28

Merchandise Inventory

Back 28

The merchandise that a company sells to customers.

Front 29

Operating Activities

Back 29

Activities that create revenue or expense in the entity's major line of business; a section of the statement of cash flows. Operating activites affect the income statement.

Front 30

Net Income

Back 30

Excess of total revenues over total expenses.

Front 31

Owner's equity

Back 31

The claim of the owners of a business to the assets of the business.

Front 32

Paid-in capital

Back 32

The amount of stockholders' equity that stockholders have contributed to the corporation.

Front 33

Partnership

Back 33

An association of tow or more persons who co-own a business for profit.

Front 34

Plant assets

Back 34

Long-lived assets, such as land, buildings, and equipent, used in the operation of the business.

Front 35

Property, Plant, Management

Back 35

Long-lived assets, such as land, buildings. and equipment, used in operation of the business.

Front 36

Proprietorship

Back 36

A business with a single owner.

Front 37

Reliability Principle

Back 37

The accounting principle that ensures that accounting records and statements are based on the most reliable data available.

Front 38

Retained Earnings

Back 38

The amount of stockholders' equity that the corporation has earned through profitable operation and has not given back to the stockholders.

Front 39

Revenue

Back 39

Increase in retained earnings from delivering goods or services to customers or clients.

Front 40

Stock

Back 40

Shares in which the owners' equity of a corporation is divided.

Front 41

Stable-Monetary-Unit Concept

Back 41

The basis for ignoring the effect of inflation in the accounting records, based on the assumption that the dollar's purchasing power is relatively stable.

Front 42

Statement of Cash Flows

Back 42

Reports cash reciepts and cash payments classified according to the entity's major activites: operating, investing, and financing.

Front 43

Stockholders

Back 43

A person who owns stock in a corporation,

Front 44

Stockholder's Equity

Back 44

The stockholders' ownership interest in the assets of a corporation.

Front 45

Statement of Retained Earnings

Back 45

Summary of the changes in all categories of stockholder's equity during the period.