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33 Cards in this Set

  • Front
  • Back
Financial Accounting
concerned with providing relevant financial information to external users
What is the primary focus of financial accounting?
It is on the financial information presented to present and potential investors.
Financial Intermediaries
Financial analysts, stockbrokers,mutual fund managers and credit raiting organizations
Managerial Accounting
Methods to provide information to internal users/managers
The most frequently provided financial statements
1.Balance Sheet, 2. The income statement 3. The statement of cash flows, 4. The statement of shareholders' equity
Financial Reporting
The process of providing information to external users.
Capital Markets
Provide a mechanism to help the economy allocate resources efficiently. (Composite of all investors and creditors)
One of three business forms, makes it easier for an enterprise to acquire resources through the capital markets. Creditors(Banks) lend money to investors
Secondary Market Transactions
Transfers of stocks and bonds among individuals and institutions
Primary Market Transactions
New capital is provided to a company resulting from the initial purchase of stock from a company
Rate of Return
The amount of money an investment returns to its investor
Expected Rate of Return and Uncertainty
Influence investment decisions because they are crucial to determing whether an investment is worth the potential risk
Financial Accounting Standards Board-sets the rules and regulations governing publicly traded companies
Accrual Accounting
Best model able to predict future cash flows
Cash Basis Accounting
Creates a measure called net operating cash flow
Net Operating Cash Flows
The difference between cash receipts and cash disbursements during a reporting period from transactions related to providing goods and services to customers
generally accpeted accounting principles, contain both specific and broad guidlines that a company should follow when reporting their financial statements
An independent intermediary to help ensure that management has in fact appropriately applied GAAP
The ability to help users see similarities and differences between events and conditions
Accounting practices over time permits valid comparisons between different periods.
Cost effectiveness
The benefits of endowing accounting information with all the qualitative characteristics must exceed the costs of doing so
Probably future economic benefits obtained or controlled by a particular entity as a result of past transactions or events
future sacrifices of economic benefits arising from present obligations of a particular entity to transer assets or provide services to other entities
The residual interest in the assets of an entity that remains after deducting liabilities
Paid-in Capital
Amounts invested by shareholders in the corporation
Retained Earnings
Amounts earned by the corporation on behlaf of its shareholders
Investments by owners
increases in equity resulting from transfers of resources to a company in exchange for ownership interest
Distributions to owners
decrease in equity resulting from trasners to owners
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
Increases in equity from peripheral or incidental transcatios of an entity
outflows or other using up of assets or incurrences of liabilities duirng a period
decreases in equity arising from peripheral or incidental transactions of an entity
Comprehensive Income
change in equity of a business enterprise during a period from transactions and other events and circumstances from nonowner sources