Create an account
All of the activities necessary to provide the members of an economic system with goods and services
Economic Entity Concept
The assumption that a single, identifiable unit must be accounted for in all situations
A business owned by two or more individuals; the organization form often used by accounting firms and law firms
A form of entity organized under the laws of a particular state; ownership evidenced by shares of stock
A certificate that represents a corporation's promise to repay a certain amount of money and interest in the future
The process of identifying measuring, and communicating economic information to various users
The branch of accounting concerned with providing management with information to facilitate planning and control
The branch of accounting concerned with the preparation of financial statements for outsider use
The part of owners' equity that represents the income earned less dividends paid over the life of an entity
The financial statement that summarizes the assets, liabilities, and owners' equity at a specific point in time
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
The assumption that an entity is not in the process of liquidation and that it will continue indefinitely
The yardstick used to measure amounts in financial statements; the dollar in the United States
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 (AICPA)
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
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
The quality of accounting information that makes it comprehensible to those willing to spend the necessary time
The quality that makes accounting information dependable in representing the events that it purports to represent
For accounting information, the quality that allows a use to analyze two or more companies and look for similarities and differences
For accounting information, the quality that allows a user to compare two or more accounting periods for a single company
The magnitude of an accounting information omission or misstatement that will affect the judgement of someone relying on the information
The practice of using the least optimistic estimate when two estimates of amounts are about equally likely
The period of time between the purchase of inventory and the collection of any receivable from sales of the inventory
An asset that is expected to be realized in cash or sold or consumed during the operating cycle or within one year if the cycle is shorter than one year
An obligation that will be satisfied within the next operating cycle or within one year if the cycle is shorter than one year
Single-Step Income Statement
An income statement in which all expenses are added together and subtracted from all revenues
Multiple-Step Income Statement
An income statement that shows classifications of revenues and expenses as well as important subtotals
The opinion rendered by a public accounting firm concerning the fairness of the presentation of the financial statements
A record used to accumulate amounts for each individual asset, liability, revenue, expense, and component of stockholders' equity
A system of accounting in which every transaction is recorded with equal debits and credits and the accounting equation is kept in balance
The process of recording an item in the financial statements as an asset, a liability, a revenue, an expense, or the like.
The amount paid for an asset and used as a basis for recognizing it on the balance sheet and carrying it on later balance sheets
The amount of cash or its equivalent that could be received by selling an asset currently
A system of accounting in which revenues are recognized when cash is received and expenses are recognized when cash is paid
A system of accounting in which revenues are recognized when earned and expenses are recognized when incurred
Inflows of assets or settlements of liabilities from delivering or producing goods, rendering services, or conducting other activities
Revenue recognition principle
Revenues are recognized in the income statement when they are realized, or realizable, and earned
The association of revenue of a period with all of the costs necessary to generate that revenue
Outflows of assets or incurrences of liabilities resulting from delivering goods, rendering services, or carrying out other activities
Journal entries made at the end of a period by a company using the accrual basis of accounting
A liability resulting from the recognition of an expense before the payment of cash
A series of steps preformed each period and culminating with the preparation of a set of financial statements
A device used at the end of the period to gather the information needed to prepare financial statements without actually recording and posting adjusting entries
The name given to balance sheet accounts because they are permanent and are not closed at the end of the period
The name given to revenue, expense, and dividend accounts because they are temporary and are closed at the end of the period
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