organizations that sell services rather than goods
turn raw materials or processed goods into finished products
Sell the goods that the Manufactures produced
a business owned and managed by a single individual
a business owned and controlled by two or more people who have entered into a written agreement
a business owned by stockholders who share in its profits but are not personally responsible for its debts
limited Liability Company or LLC
Form of business organization with limited liability and has pass-through tax advantages
the occupation of maintaining and auditing records and preparing financial reports for a business, analyze, record and summarize
language of business
accounting has been called.....
the field of accounting whereby accountants are employed by a business firm or a not-for-proft organization
Firms that provide accounting services to their clients
certified public accountant (CPA)
an accountant who has passed certain examinations and met all other statutory and licensing requirements of a United States state to be certified by that state
the internal use of accounting statements by managers in planning and directing the organization's activities
Persons using accounting information who are directly involved in managing the organization.
accounting information and analyses prepared for people outside the organization
Financial reports that summarize the financial condition and operations of a business
external financial statement users
are not given access to the company's detailed internal records
person or institution to whom a debt is owed
Financial institutions that accept deposits and make loans
Companies that provide material, human, financial, and informational resources to other companies
people who buy shares in a joint stock company
A group of people that make up a corporation by sharing ownership in a certain company
money and other valuables belonging to an individual or business
anything that is owed to someone else
the amount of the business that belongs to the owners minus any liabilities owed by the business
fundamental accounting equation
Assets = liabilities + owners' equity; this is the basis for the balance sheet.
The actual amount paid for merchandise or other items bought is recorded.
profit, earnings or net income
the difference between total revenues and expenses
funds that flow into a business from the sale of goods or services
Costs that are used up (expired) in the production of revenue.
Separate entity assumption
Activities of the business are separate form activities of the owners.
the name given to an account
also called: statement of income or statement of operations
a financial statement that gives operating results for a specific period
monetary unit assumption
An assumption that requires that only those things that can be expressed in money are included in the accounting records.
the amount of money remaining after deductions are taken away
The difference between total revenue and total expenses when total expenses are greater
statement of owner's equity
Reports the change in the owners' investment and the change in the owners' retained earnings.
also known as statement of financial position
a record of the financial situation of an institution on a particular date by listing its assets and the claims against those assets
statement of cash flows
Financial statement that reports cash receipts and disbursements related to a firm's three major activities: operations, investments, and financing.
activities that create revenue or expense in the entity's major line of business
activites that involve buying and selling productive resources
Included borrowing money, issuing shares of stock and paying dividends
Financial Accounting Standards Board (FASB)
The primary organization for setting accounting standards for businesses in the United States.
generally accepted accounting principles (GAAP)
A set of rules used by accountants to prepare financial reports
Public Company Accounting Oversight Board (PCAOB)
The group charged with determining auditing standards and reviewing the performance of auditing firms.
Securtities and Exchange Commission (SEC)
is the government agency that supervises the work of the FASB and the PCAOB
the study of moral choices that conform to professional standards of conduct
American Institute of Certified Public Accountants (AICPA)
The national professional organization of CPAs engaged in promoting high professional standards to ensure that CPAs serve the public interest
Code of Professional Conduct
Rules established by the American Institute of Certified Public Accountants to govern the ethical performance of professional services by CPAs
Sarbanes-Oxley Act of 2002
was created when frauds happened
procedures a company uses to protect its assets and ensure the accuracy of its accounting information