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46 Cards in this Set

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  • Back
accounting equation/balance sheet equation
a description of the relationship between a company's assets, liabilities, and equity; expressed as Assets=Liabilities + Owner's Equity
accounts payable
a liability created by buying goods or services on credit
accounts receivable
an asset created by selling products or services on credit
Accounting Standards Board; the authoritative committee the identifies generally accepted accounting standards
Auditing Standards Board; the authoritative committee that identifies generally accepted auditing standards
properties or economic resources owned by the business; more precisely, rexources with an ability to provide future benefits to the business
balance sheet
a financial statement that reports the financial position of a business at a point in time; lists the types and dollar amounts of assets, liablilities, and equity as of a specific date; also called the statement of financial position
business activities
all of the transactions and events experienced by a business
business entity principle
the principle that require every business to be accounted for separtely from its owner or owners; based on the goal of providing relevant information about each business to users
business events
activities that do not involve an exchange of economic consideration between two parties and therefore do not affect the accounting equation
busniess transaction
an exchange of economic consieration between two parties that causes a change in assets, liabilities, or owner's equity; ex. products, services, money, and rights to collect money
calendar year
an accountin gyear that begins on January 1 and ends on December 31
cash flow statement
a financial statement that describes the sources and uses of cash for a reporting period; where a company's cash came from (reciepts) and where it went during the period (payments); the cash flows are arranged by an organization's major activities; operating, investing, and financing activities
CICA Handbook
the publication of the Canadian Institute for Chartere Accountants (CICA) that details generally accepted accounting priciples
similarity; ability to be compared with other information
conformity with other or earlier information; using the same accounting procedures from one accounting period to the next
cost principle
the accounting priciple that require financial statement information to be based on actual costs incurred in business transactions; it requires assets and services to be recorded initially at the cash or cash equivalent amount given in exchange
individuals or organizations entitled to receive payments from a company
individuals or organization that owe amounts to a business
economic consideration
something of value; products, services, money, and rights to collect money
equity/net assets
the owner's claim on the assets of a business; more precisely, the assets of an entity that remain after deducting its liabilities
costs incurred or the using up of assets as a result of the major or central operations of a business
financial statements
the most importnt products of accounting; include the income statement, the statement of owner's equity, the balance sheet, and the cash flow statement
fiscal year
a one-year reporting period
Generally Accepted Accounting Priciples (GAAP)
the rules adopted by the accounting profession that make up accetable accounting practices for the preparation of financial statements
going concern principle
the rule that requires financial statements to reflect the assumption that the business wil continue operating instead of being closed or sold, unless evidence shows that it will not continue
IASC: International Accounting Standards Committee
a committee that attempts to create more harmony among the accounting practices of different countries by identifying preferred practices and encouraging their worldwide acceptance
income statement
the financial statement that shows, by subtracting expenses from revenues, whether the business earned a profit; it lists the types and amounts of revenues earned and expenses incurred by a business over a period of time
the debts or obligations of a business; claims by others that will reduce the future assets of a business or require future services or products
monetary unit principle
the expression of transactions and events in money units
natural business year
a 12-month period that ends when a company's slaes activities are at their lowest point
net income
the excess of revenues over expenses for a period
net loss
the excess of expenses over revenues for a period
note payable
a liabilty expressed by a written promise to make a future payment at a specific time
objectivity principle
the accounting guideline that requires financial statement information to be supported by independent, unbiased evidence rather that someone's opinion; objectivity adds to the reliability, verifiability, and usefulness of accounting information
owner investments
the transfer of an owner's personal assets to the business
owner's equity
total assets minus total liabilities; represents how much of the assets belong to the owner; increases with owner investments and net income and decreases with owner withdrawals and net loss
owner withdrawals
the distribution of cash or other assets from a properietorship or partnership to its owner or owners
another name for net income
information must make a difference in the decision-making rocess
the extent to which information is verifiable and neutral; implies a consensus among different measures
revenue recognition principle
provides guidance on when revenue should be reflected on the income statement; the rule states that revenue is recorded at the time it is earned regardless of whether cash or another asset has been exchanged
the value of assets exchanged for goods or services provided to customers as part of a business's main operations; may occur as inflows of assets or decreases in liabilities
source documents
documents that identify and describe transactions entering the accounting process; the source of accounting information, whether in paper or electronic form
statement of owner's equity
a financial statement that reports the changes in equity over the reporting period; beginning equity is adjusted for increases such as owner investments or net income and decreases such a owner withdrawals or a net loss
6 GAAP principles
business entity principle
cost principle
objectivity principle
going concern principle
monetary unit principle
revenue recognition principle