comprehensive system for collecting, analyzing and communicating financial information to owners, employees, the public and regulatory agencies
Accounting Information System
Organized procedure for identifying, measuring, recording and retaining financial information for use in accounting statements and management reports
Field concerned with external information users: consumer groups, unions, stockholders, suppliers, creditors and government agencies. Prepare income statements — balance sheets that focus on company as a whole.
Serves internal users by providing information to make decisions, monitor projects and plan future activities.
Certified Public Accountants
Licensed by the state and work as individual practitioners, or may join or form partnerships. They provide auditing, tax and management services.
Salaried person hired by a business to carry out day-to-day financial activities
Type of private accountant who provides financial services to support managers in various business activities within a firm. Receive CMA designation from IMA.
Certified Fraud Examiners
Those with qualifications for a specialty area within forensic accounting, hired by firms to prevent fraud from within.
Sarbanes-Oxley Act of 2002
Enactment of federal regulations to restore public trust in accounting practices by imposing new requirements on financial activities in publicly traded corporations. Restricts nonaudit services, encourages independent audits,
The accounting equation
assets = liabilities + owner's equity or assets - liabilities = owner's equity
Any economic resource expected to benefit a firm or an individual who owns it. Ie, land, buildings or equipment
amount of money owners would receive if they sold all assets and paid all liabilities. More of this = better security for investors. Includes the original investment and profits made.
Any of several types of reports summarizing a company's financial status to stakeholders and to aid in managerial decision making.
Financial statement that supplies detailed information about a firm's assets, liabilities and owner's equity. Statement of financial position.
Ease of converting an asset into cash. Includes cash itself, marketable securities and merchandise inventory
Nonphysical, ie patent or trademark that has economic value in the form of expected benefit
Type of owner's equity, kept by a firm for use rather than paid out as dividends to shareholders
Profit and loss statement that covers a period of time, like a video. Revenues - expenses = profit
One aspect of income statement, funds flowing into a business for sale of goods or services.
Cost of revenues
One aspect of income statement, incurred to obtain revenues from other companies. Includes cost of goods sold (money paid for intermediate goods) and gross profit (quick to calculate. firms revenues - cost of revenues)
Statement of cash flows
Discribes firms' yearly cash receipts and cash payments from operations, investing and financing. Like a photo
detailed statement of estimated receipts and expenditures for a future period of time. (Either one, three or five years)
Guideline that financial statements should not include just numbers alone but should also furnish management's interpretations and explanations.
Financial ratio, either short or long term, for estimating the borrower's ability to repay debt
Financial ratio for measuring a company's ability to pay current debts out of current assets. Current assets/Current liabilities