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31 Cards in this Set
- Front
- Back
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Accounting consists of 3 basic activities |
Identifies, records, communicates |
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Internal users |
Managers who plan, organize, and run a business (finance, marketing, HR) |
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External users |
Organizations and individuals outside a company who want financial info about company. (Investors, creditors) |
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Sarbanes-Oxley act (sox) |
Passed to reduce unethical corporate behavior. Must certify accuracy of financial info. |
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GAAP |
Generally accepted accounting principles. Set of standards |
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Most widely used financial statement |
Income statemwnt. |
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FASB |
financial accounting standards board. All things accounting |
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SEC |
Securities and exchange commission |
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IASB |
International accounting standards board |
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Historical cost principle |
Dictates that companies record assets at their original cost. |
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Fair value principle |
States that assets and liabilities should be reported at fair value |
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Monetary unit assumption |
Requires that companies include in the accounting records only transaction data that can be expressed in terms of money |
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Economic entity assumption |
Activities of entity be kept separate from owner and other economic entities |
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Forms of business ownership |
Proprietorship, partnership, corporation |
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Proprietorship |
Owned by one person. Owner personally liable. |
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Partnership |
Two or more persons. Often retail or service. Generally unlimited personal liability. |
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Corporation |
Ownership divided into stock. Separate legal entity. Limited liability. |
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Accounting equation |
Assets = liabilities + stockholders equity or assets-liabilities=equity |
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Assets |
Resources a business owns. cash, supplies, equipment. |
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Liabilities |
What you owe. Debts and financial obligations to creditors. Salaries, wages, accounts payable. |
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Stockholders equity |
Ownership claim on total assets |
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Revenues |
Sale of goods |
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Expenses |
Cost of assets consumed or services used in process of generating revenue |
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Dividends |
Distribution of cash to stockholders |
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Transactions |
Economic event recorded by accountants. Internal or external. |
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Retained earnings |
Profit kept |
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The four financial statements |
Income, retained earnings, balance sheet, statement of cash flows |
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Financial statement |
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Income statement |
Qqq |
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Balance sheet |
Qqq |
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Statement of cash flows |
Qqq |
