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41 Cards in this Set

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Business
All of the activities necessary to provide the members of an economic system with goods and services
Business Entity
An organization operated to earn a profit
Sole Proprietorship
A form of organization with a single owner
Economic entity concept
The assumption that a single, identifiable unit must be accounted for in all situations
Partnership
A business owned by two or more individuals; the organization form often used by accounting firms and law firms
Corporation
A form of entity organized under the laws of a particular state; ownership evidenced by shares of stock
Share of Stock
A certificate that acts as evidence of ownership in a corporation
Bond
A certificate that represents a corporation's promise to repay a certain amount of money and interest in the future
Nonbusiness entity
An organization operated for some purpose other than to earn a profit
Liability
An obligation of a business
Capital Stock
Indicates the owners' contributions to a corporation
Stockholder
One of the owners of a corporation
Alternate term: Shareholder
Creditor
Someone to whom a company or person has a debt
Alternate term: Lender
Asset
A future economic benefit
Revenue
An inflow of assets resulting from the sale of goods and services
Expense
An outflow of assets resulting from the sale of goods and services
Accounting
The process of identifying measuring, and communicating economic information to various users
Management accounting
The branch of accounting concerned with providing management with information to facilitate planning and control
Financial Accounting
The branch of accounting concerned with the preparation of financial statements for outsider use
Owners equity
The owners claims on the assets of an entity
Stockholders' equity
The owners' equity in a corporation
Alternate term: shareholders equity
Retained earnings
The part of owners' equity that represents the income earned less dividends paid over the life of an entity
Balance sheet
The financial statement that summarizes, the assets, liabilities, and owners' equity at a specific point in time
Alternate term: Statement of financial position
Income Statement
A statement that summarizes revenues and expenses
Alternate term: Statement of income
Net Income
The excess of revenues over expenses
Alternate term: Profits, earnings
Dividends
A distribution of the net income of a business to its owners
Statement of retained earnings
The statement that summarizes the income earned and dividends paid over the life of a business
Statement of cash flows
The financial statement that summarizes a company's cash receipts and cash payments during the period from operating, investing, and financing activities
Cost Principle
Assets are recorded at the cost to acquire them
Alternate Term: Original cost or historical cost
Going Concern
The assumption that an entity is not in the process of liquidation and that it will continue indefinitely
Monetary unit
The yardstick used to measure amounts in financial statements; the dollar in the United States
Time Period
An artificial segment on the calendar used as the basis for preparing financial statements
Generally Accepted accounting principles (GAAP)
The various methods, rules, practices, and other procedures that have evolved over time in response to the need to regulate the preparation of financial statements.
Securities and Exchange Commission (SEC)
The federal agency with ultimate authority to determine the rules for preparing statements for companies whose stock is sold to the public
Financial Accounting Standards Board (FASB)
The group in the private sector with authority to set accounting standards
American Institute of Certified Public Accountants
The professional organization of certified public accountants
Certified Public Accountant (CPA)
The designation for an individual who has passed a uniform exam administered by the AICPA and has met other requirements as determined by individual states
Public Company Accounting Oversight Board (PCAOB)
A five-member body created by an act of Congress in 2002 to set auditing standards
International Accounting Standards Board (IASB)
The organization formed to develop worldwide accounting standards
Auditing
The process of examining the financial statements and the underlying records of a company to render an opinion as to whether the statements are fairly presented
Sarbanes-Oxley Act
An act of Congress in 2002 intended to bring reform to corporate accountability and stewardship in the wake of a number of major corporate scandals.