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53 Cards in this Set

  • Front
  • Back
Define accounting.
an information system that measures , processes, and communicates financial information about an identifiable economic entity
Define profitability.
the need to earn enough income to attract and hold investment capital
Define liquidity.
having enough cash available to pay debts when they are due
Define financing activities.
activities undertaken by management to obtain adequate funds to begin and to continue operating a business
Define investing activities.
activities undertaken by management to spend capitol in ways that are productive and will help a business achieve its objectives
Define operating activities.
activities undertaken by management in the course of running the businesss
Define performance measures.
indicators of whether managers are achieving business goals and whether the business activities are well managed.
Define management accounting.
provides internal decision makers who are charged with achieving the goals of profitability and liquidity with information about financing, investing, and operating activities.
Define financial accounting.
generates reports and communicates them to external decision makers so that they can evaluate how well the business has achieved its goals.
Define financial statements.
The primary means of communicating important accounting information to users. They include the income statement, statement of owner's equity, balance sheet, and statement of cash flows.
Define bookkeeping.
the process of recording financial transactions and keeping financial records.
Define computer.
an electronic tool used to collect, organize, and communicate vast amounts of information with great speed.
Define management information system (MIS).
consists of the interconnected subsystems that provide the information needed to run a business.
Define management.
refers to the people who have overall responsibility for operating a business and for meeting its profitability and liquidity goals.
Define business transactions.
economic events that affect the financial position of a business entity.
Define money measure.
the recording of all business transactions in terms of money.
Define exchange rate.
the value of one currency in terms of another.
Define seperate entity.
a business that is treated as distinct from its creditors, customers, and owners.
Define sole proprietorship.
a business owned by one person and is not incorporated.
Define partnership.
a business that is owned by two or more people and that is not incorporated.
Define corporation.
a business unit chartered by the state and legally seperate from its owners (the stockholders).
Define financial position.
refers to the economic resources that belong to a company and the claims against those resources at a point in time.
Define the accounting equation.
Assets = liability + owner's equity
Define assets.
economic resources owned by a business that are expected to benefit future operations.
Define liabilities.
present obligations of a business to pay cash, transfer assets, or provide services to other entities in the future.
Define owner's equity.
represents the claims by the owner of a business to the assets of the business. It equals the residual interest, or residual equity, in the assets of an entity after deducting the entity's liabilities.
Define net assets.
assets minus liabilities; owner's equity.
Define owner's investments.
the assets that the owner puts into the business.
Define owner's withdrawals.
the assets that the owner takes out of the business.
Define revenues.
increases in owner's equity that result from operating a business.
Define expenses.
decreases in owner's equity that result from operating a business.
Define net income.
the difference between revenues and expenses when revenues exceed expenses.
Define net loss.
the difference between expenses and revenues when expenses exceed revenues.
Define income statement.
summarizes the revenues earned and expenses incurred by a business over a period of time.
Define statement of owner's equity.
shows the change in the owner's capital over a period of time.
Define balance sheet.
shows the financial position of a business on a certian date, usually the end of the month or year.
Define statement of cash flows.
the financial statement that shows the inflows and outflows of cash from operating activities, investing activities, and financing activities over a period of time.
Define cash flows.
the inflows and outflows of cash into and out of a business.
Define generally accepted accounting principles (GAAP).
the conventions, rules, and procedures that define accepted accounting practice at a particular time.
Define certified public accountants (CPAs).
public accountants who have met the stringent state licensing requirements.
Define an audit.
an examination of a company's financial statements in order to render an independent professional opinion that they have been presented fairly, in all material respects, in conformity with generally accepted accounting principles.
What is the Financial Accounting Standards Board (FASB).
the most important body for developing and issuing rules on accounting practice, called Statements of Financial Accounting Standards.
What is the American Institute of Certified Public Accountants?
the professional association of certified public accountant.
What is the Governmental Accounting Standards Board (GASB)?
the board responsible for issuing accounting standards for state and local governments.
What is the International Accounting Standards Board (IASB)?
the organization that encourages worldwide cooperation in the development of accounting principles; it has approved more than 30 international standards of accounting.
What is the Internal Revenue Service (IRS)?
the federal agency that interprets and enforces the tax laws governing the assessment and collection of revenue for operating the national government.
Define ethics.
a code of conduct that addresses whether everyday actions are right or wrong.
Define professional ethics.
a code of conduct that applies to the practice of a profession.
Define integrity.
honesty, candidness, and the subordination of personal gain to service and the public trust.
Define objectivity.
impartiality and intellectual honesty.
Define independence.
the avoidance of all relationships that impair or appear to impair an accountant's objectivity.
Define due care.
competence and diligence in carrying out professional responsibilities.
What is the Institute of Management Accountants (IMA).
a professional organization made up primarily of management accountants.