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30 Cards in this Set

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System for recognizing, organizing, analyzing, and reporting information about financial transactions.

Financial Accounting

Prepares financial statements for use by owners, creditors, suppliers, and other external stakeholders.


Generally Accepted Accounting Principles.

Set of accounting standards.


Financial Accounting Standards Board.

Established general principles.

Balance Sheet

Financial statement that reports the financial position of a firm by identifying and reporting the value of a firm's assets, liabilities, and owner's equity.

Accounting Equation

Assets = Liabilities + Owner's Equity


Resources owned by a firm


Claims outsiders have against a firm's assets

Owner's Equity

Claims a firm's owner have against company assets.

Income Statement

Reports revenues, expenses, and net income that resulted from firm's operation.


Increases in assets

Accrual-Basis Accounting

Method of accounting that recognizes revenue when it is earned and matches expenses to the revenues they helped produce.


Resources used up by a firm

Net Income

Difference between revenue of a firm and expenses it incurs.

Statement of Cash Flows

Financial statement that identifies a firm's sources and users of cash.

Horizontal Analysis

Analysis of financial statements that compares account values reputed on thar statements over two or more years to identify changes and trends.


Management tool that shows explicitly how a firm will acquire and use resources in order to achieve a goal.

Operating Budgets

Communicate an organization's sales and production goals and needed resources.

Financial Budgets

Focus on the firm's financial goals and identifies resources needed to achieve those goals.

Matter Budget

Presentation of an organization's operation and financial Budgets that represent the firm's overall plan of action.

Managerial Accounting

Provides report and analysis to managers to help them make informed business decisions.


Value of what is given up

Out-Of-Pocket Cost

Involves payment of money or other resources

Implicit Cost

Opportunity cost that arises when a firm users owner-supplied resources.

Fixed Costs

Costs that remain the same when the level of production changes

Variable Costs

Costs that vary directly with level of production

Direct Cost

Closures incurred directly as the result of some specific cost object

Indirect Cost

Result of a firm's general operations, not directly tied to any specific cost object


Activity-Based Costing.

Technique to assign product costs based on links between activities that drive costs and the production of specific products.


Securities and Exchange Commission