Intermediate Accounting Vocab Chapter 1

Front 1

Financial Accounting

Back 1

concerned with providing relevant financial information to external users

Front 2

What is the primary focus of financial accounting?

Back 2

It is on the financial information presented to present and potential investors.

Front 3

Financial Intermediaries

Back 3

Financial analysts, stockbrokers,mutual fund managers and credit raiting organizations

Front 4

Managerial Accounting

Back 4

Methods to provide information to internal users/managers

Front 5

The most frequently provided financial statements

Back 5

1.Balance Sheet, 2. The income statement 3. The statement of cash flows, 4. The statement of shareholders' equity

Front 6

Financial Reporting

Back 6

The process of providing information to external users.

Front 7

Capital Markets

Back 7

Provide a mechanism to help the economy allocate resources efficiently. (Composite of all investors and creditors)

Front 8

Corporation

Back 8

One of three business forms, makes it easier for an enterprise to acquire resources through the capital markets. Creditors(Banks) lend money to investors

Front 9

Secondary Market Transactions

Back 9

Transfers of stocks and bonds among individuals and institutions

Front 10

Primary Market Transactions

Back 10

New capital is provided to a company resulting from the initial purchase of stock from a company

Front 11

Rate of Return

Back 11

The amount of money an investment returns to its investor

Front 12

Expected Rate of Return and Uncertainty

Back 12

Influence investment decisions because they are crucial to determing whether an investment is worth the potential risk

Front 13

FASB

Back 13

Financial Accounting Standards Board-sets the rules and regulations governing publicly traded companies

Front 14

Accrual Accounting

Back 14

Best model able to predict future cash flows

Front 15

Cash Basis Accounting

Back 15

Creates a measure called net operating cash flow

Front 16

Net Operating Cash Flows

Back 16

The difference between cash receipts and cash disbursements during a reporting period from transactions related to providing goods and services to customers

Front 17

GAAP

Back 17

generally accpeted accounting principles, contain both specific and broad guidlines that a company should follow when reporting their financial statements

Front 18

Auditor

Back 18

An independent intermediary to help ensure that management has in fact appropriately applied GAAP

Front 19

Comparability

Back 19

The ability to help users see similarities and differences between events and conditions

Front 20

Consistency

Back 20

Accounting practices over time permits valid comparisons between different periods.

Front 21

Cost effectiveness

Back 21

The benefits of endowing accounting information with all the qualitative characteristics must exceed the costs of doing so

Front 22

Assets

Back 22

Probably future economic benefits obtained or controlled by a particular entity as a result of past transactions or events

Front 23

Liabilities

Back 23

future sacrifices of economic benefits arising from present obligations of a particular entity to transer assets or provide services to other entities

Front 24

Equity

Back 24

The residual interest in the assets of an entity that remains after deducting liabilities

Front 25

Paid-in Capital

Back 25

Amounts invested by shareholders in the corporation

Front 26

Retained Earnings

Back 26

Amounts earned by the corporation on behlaf of its shareholders

Front 27

Investments by owners

Back 27

increases in equity resulting from transfers of resources to a company in exchange for ownership interest

Front 28

Distributions to owners

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decrease in equity resulting from trasners to owners

Front 29

Revenues

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inflows or other enhancements of assets or settlements of liabilities from delivering or producing goods, rendering services or other activities that constitute the entity's on going major, or central, operations

Front 30

Gains

Back 30

Increases in equity from peripheral or incidental transcatios of an entity

Front 31

Expenses

Back 31

outflows or other using up of assets or incurrences of liabilities duirng a period

Front 32

Losses

Back 32

decreases in equity arising from peripheral or incidental transactions of an entity

Front 33

Comprehensive Income

Back 33

change in equity of a business enterprise during a period from transactions and other events and circumstances from nonowner sources