accounting unit one
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Created by:
x3colormyxworld on September 24, 2011
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28 terms
Terms | Definitions |
|---|---|
 accounting | information and measurement system that identifies, records, and communicates information about a business |
| bookkeeping | recording of transactions and events, either manually or electronically |
| external users | not directly involved in running the organization -lenders -shareholders -government |
| financial accounting | the area of accounting aimed at serving external users by providing them with general purpose financial statements |
| internal users | accounting information are those directly involved in managing and operating an organization -officers -managers -internal auditors |
| managerial accounting | serves the decision making needs of internal users |
| ethics | beliefs that distinguish right from wrong |
| generally accepted accounting principals (GAAP) | financial accounting practice is governed by concepts and rules |
| securities and exchange commission (SEC) | a government agency, has the legal authority to set GAAP |
| financial accounting standards board (FASB) | private sector group that sets both broad and specific principles |
| international accounting standards board (IASB) | an independent group (with people from many different countries) that issue international financial reporting standards (IFRS) - |
| conceptual framework | FASB and IASB are attempting to converge and enhance |
| CF objectives | to provide information useful to investors, creditors and others |
| CF qualitative characteristics | to require information that is relevant, reliable and comparable |
| CF elements | to define items that financial statements can contain |
| CF recognition and measurement | to set criteria that an item must meet for it to be recognized as an element and how to measure that element |
| Sarbanes-Oxley Act (SOX) | help curb financial abuses at companies that issue their stock to the public |
| accounting system | what the company owns and owes |
| accounting equation | assets = liabilities + equity |
| assets | resources a company owns or controls |
| liabilities | creditors claims on assets |
| equity | the owners claims on assets |
| owner investments | assets an owner puts into the company and are included under the generic account owner capital |
| revenues | sales of products or services to the customer |
| owner withdrawals | assets the owner takes from the company for personal use |
| expenses | cost necessary to earn revenue |
| balance sheet | describes a company's financial position (types and amounts of assets, liabilities and equity) at a point in time |
| statement of cash flows | identifies cash inflows (receipts) and cash outflows (payments) over a period of time |
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