1.
Accounting: Information and measurement system that identifies, records, and communicates relevant information about a company's business activities
2.
Assets: Resources a business owns or controls that are expected to provide current and future benefits to the business
3.
Audit: Analysis and report of an organization's accounting system, its records, and its reports using various tests
4.
Balance Sheet: Financial statement that lists types and dollar amounts of assets, liabilities and equity at a SPECIFIC date
5.
Business Entity Assumption: Principle that requires a business to be accounted for separately from its owner(s) and from any other entity
6.
Common Stock: Corporation's basic ownership share; also generically called capital stock
7.
Conceptual Framework: A written framework to guide the development, preparation, and interpretation of financial accounting information
8.
Corporation: Business that is a separate legal entity under state or federal laws with owners called shareholders or stockholders
9.
Cost Principle: Accounting principle that prescribes financial statement information to be based on actual costs incurred in business transactions (Not what something may be WORTH but what was actually PAID)
10.
Cost-Benefit Constraint: Notion that only information with benefits of disclosure greater than the costs of disclosure need be disclosed
11.
Equity: Owner's claim on the assets of a business; equals the residual interest in an entity's assets after deducting liabilities; also called net assets
12.
Events: Happenings that both affect an organization's financial position and can be reliably measured
13.
Expenses: Outflows or using up of assets as part of operations of a business to generate sales
14.
Financial Accounting: Area of accounting aimed mainly at serving external users
15.
Financial Accounting Standards Board (FASB): Independent group of full-time members responsible for setting accounting rules
16.
Full Disclosure Principle: Principle that prescribes financial statements (including notes) to report all relevant information about an entity's operations and financial condition. ((Notes are like invoices outgoing and incoming)
17.
Generally Accepted Accounting Principles (GAAP): Rules that specify acceptable accounting practices
18.
Going-Concern Assumption: Principle that prescribes financial statements to reflect the assumption that the business will continue operating
19.
Income Statement: Financial statement that subtracts expenses from revenues to yield a net income or loss over a specified PERIOD OF TIME; also includes any gains or losses
20.
International Accounting Standards Board (IASB): Group that identifies preferred accounting practices and encourages global acceptance. Aim to develop a single set of global standards, to promote those standards, and to converge national and international standards globally.
They also issue IFRS (International Financial Reporting Standards)
21.
International Financial Reporting Standards (IFRS): Required or allowed by over 100 countries. Set by IASB
22.
Liabilities: Creditors' claims on an organization's assets; involves a probable future payment of assets, products or services that a company is obligated to make due to past transactions or events.
23.
Managerial Accounting: Area of accounting aimed mainly at serving the decision-making needs of internal users
24.
Matching (Or Expense Recognition) Principle: Prescribes expenses to be reported in the same period as the revenues that were earned as a result of the expenses
25.
Materiality Constraint: Prescribes that accounting for items that significantly impact financial statement and any inferences from them adhere strictly to GAAP
26.
Measurement Principle: Accounting information is based on cost with potential subsequent adjustments to fair value
27.
Net Income: Amount earned after subtracting all expenses necessary for and matched with sales for a PERIOD (AKA income, profit, earnings)
28.
Partnership: Unincorporated association of two or more persons to pursue a business for profit as co-owners
29.
Proprietorship: Business owned by one person that is not organized as a corporation
30.
Return: Monies received from an investment; often in percent form
31.
Return on Assets (ROA): Ratio reflecting operating efficiency
32.
Revenue Recognition Principle: Revenue is recognized when earned
33.
Revenues: Gross increase in equity from a company's business activities that earn income; also called sales
34.
Risk: Uncertainty about an expected return
35.
Sarbanes-Oxley Act (SOX): Helps curb financial abuses at companies that issue their stock to the public by oversight and stringent internal controls in the hopes that reports are more truthful and transparent
36.
Securities and Exchange Commission (SEC): Federal agency Congress has charged to set reporting rules for organizations that sell ownership shares to the public
37.
Shareholders: Owners of a corporation; also called stockholders
38.
Shares: Equity of a corporation divided into ownership units; also called stock
39.
Statement of Cash Flows: Financial statement that lists cash inflows(receipts) and cash outflows(payments) during a period; arranged by operating, investing and financing
40.
Statement of Owner's Equity: Report of changes in equity over a period; adjusted for increases (Owner investment and net income) and for decreases (Withdrawals and net loss)
41.
Time Period Assumption: Assumption that an organization's activities can be divided into specific time periods such as months, quarters or years
