Chapter 1: Accounting In Business

Front 1

an information and measurement system that identifies, records, and communicates relevant, reliable, and comparable informationa bout an organization's business activities

Back 1

accounting

Front 2

recording of transactions and events, either manually or electronically

Back 2

recordkeeping/ bookkeeping

Front 3

not directly involved in running the organization

Back 3

external users

Front 4

area of accounting aimed at serving external users by providing them with financial statements

Back 4

financial accounting

Front 5

those directly involved in managing and operating an organization

Back 5

internal users

Front 6

area of accounting that serves the decision-making needs of internal users

Back 6

managerial accounting

Front 7

beliefs that distinguish right from wrong

Back 7

ethics

Front 8

aims to make information in financial statements relevant, reliable, and comparable

Back 8

GAAP

Front 9

private group that sets both broad and specific principles

Back 9

FASB

Front 10

government group that establishes reporting requirements for companies that issue stock to the public

Back 10

SEC

Front 11

hopes to create more harmony among accounting practices of different countries

Back 11

IASB

Front 12

means that accounting information is supported by independent, unbiased evidence

Back 12

objectivity

Front 13

means that accounting information is based on actual cost

Back 13

cost principle

Front 14

means that ccounting information reflects an assumption that business will continue operating instead of being closed or sold

Back 14

going-concern principle

Front 15

means that we can express transactions and events in monetary, or money, units

Back 15

monetary unit principle

Front 16

provides guidance on when a company must recognize revenue

Back 16

revenue recognition principle

Front 17

means that a business is accounted for separately from other business entities, including its owner

Back 17

business entity principle

Front 18

business owned by one person

Back 18

sole proprietorship

Front 19

business owned by two or more people

Back 19

partnership

Front 20

business legally separate from its owners

Back 20

corporation

Front 21

owners within a corporation

Back 21

shareholders/stockholders

Front 22

ownership of corporations is divided into units

Back 22

shares/stock

Front 23

when a corporation issues only one class of stock

Back 23

common stock

Front 24

passed to help curb financial abuses at companies that issue their stock to the public

Back 24

Sarbanes-Oxley Act

Front 25

resources with future benefits that are owned or controlled by a company

Back 25

assets

Front 26

what a company owes its nonowners in future payments, products, or services

Back 26

liabilities

Front 27

refers to the claims of its owner(s)

Back 27

equity

Front 28

assets = liabilities + equity

Back 28

accounting equation

Front 29

assets an owner puts into the company and are included under the generic account Owner, Capital

Back 29

owner investments

Front 30

increase equity and are the assets earned from a company's earnings activities

Back 30

revenues

Front 31

assets an owner takes from the the company for personal use

Back 31

owner withdrawals

Front 32

decrease equity and are the cost of assets or services used to earn revenues

Back 32

expenses

Front 33

occurs when revenues exceed expenses

Back 33

net income

Front 34

exchanges of value between two entities

Back 34

external transactions

Front 35

exchanges within an entity

Back 35

internal transaction

Front 36

refer to those happenings that affect an entity's accounting equation and can be reliabily measured

Back 36

events

Front 37

describes a company's revenues and expenses along with the resulting net income or loss over a period of time due to earnings activities

Back 37

income statement

Front 38

explains changes in equity from net income (or loss) and from any owner investments and withdrawals over a period of time

Back 38

statement of owner's equity

Front 39

describes a company's financial position (types and amounts of assets, liabilities, and equity) at a point in time

Back 39

balance sheet

Front 40

identifies cash inflows (receipts) and cash outflows (payments) over a period of time

Back 40

statement of cash flows