Business Management chapter 15
Terms in this set (59)
comprehensive system for collecting, analyzing and communicating financial information.
The recording, classifying, summarizing, and interpreting of financial events and transactions to provide management and other interested parties the information they need to make good decisions.
CPA Vision Project
Identifies a unique combination of skills technology and knowledge (called Core competencies for accounting the combination of skills technology, and knowledge that will be necessary for the future CPA)
person who manages all of a firms accounting activities (chief accounting Officer) ensures that AIS provides reports and statements needed for planning decision making and other management activities
2 Main Fields of Accounting
Financial ----Field of accounting concerned with EXTERNAL users of a company's financial information.
Managerial Accounting----Field of accounting that services INTERNAL users of a company financial information.
Certified public Accountant (CPA)
Accountant licensed by the state and offering service to the public pass exam by AICPA CPA =Public works individual or partnerships.
Systemic examination of a company's accounting system to determine whether its financial reports reliably represent its operations. examines companies AIS to determine financial reports reliably represent its operations audit reports needed when getting loans ,selling stock.
Generally accepted accounting principles (GAAP)
Accounting guidelines that govern the content and form of financial reports
US government legally enforces accountant audits rules.
Generally accepted accounting principles (GAAP)
How organizations account for their money is usually mandated by rules and regulations, and in the United States these rules are called Generally accepted accounting principles (GAAP)
assistance provided by CPAs for tax preparation and tax planning
NON certified Public accountants
don't take exams work in small firms doing income tax preps, financial planning services and go by local and state laws and financial statements used for internal purposes based on information from managers.
Assistance provided by CPA firms in areas such as financial planning, information systems design and other areas of concern for client firms production scheduling information systems studies AIS design, executive recruitment, large CPA include engineers, architects, mathematicians and psychologists all available for consulting.
an accountant who works for a single firm, government agency, or nonprofit organization
salaried accountant hired by a business to carry out its day-to-day financial activities
private accountant who provides financial services to support managers in various business activities within a firm
As a ___management Accountant__ you work within an organization, preparing reports and analyzing financial information such as budgets and cost management.
a professional accountant who has met certain educational and experience requirements and been certified by the Institute of Certified Management Accountants
combining accounting and investigating skills to assist in legal and criminal matters
the practice of accounting for legal purposes
law enforcement officials ask forensic accountants to investigate a trail of financial transactions behind a suspected crime ( money laundering scheme, or investment swindle)
Forensic accounts assist in the application of accounting evidence for judicial proceedings by preparing and preserving evidence for these proceeding and present visual aids to support trail evidence by testifying expert witness and economic damages.
Certified fraud Examiner
Professional designation administered by the ACFE in recognition of qualifications for a specialty area within forensic accounting
Sarbanes Oxley Act of 2002 (Sarbox or Sox)
to ensure the accuracy and fair reporting of these financial statements, laws like the _sarbanes oxley Act of 2002_____ were enacted to counter fraudulent reporting
requires loans to insiders be priced at market rates
Assets = Liabilities + Owner's Equity
Used by accountants to balance data for the firms financial transactions at various points in the year
(n.) something of value; a resource; an advantage
any economic resource expected to benefit a firm or an individual who owns it.
An amount owed by a business, firm or individual
The amount remaining after the value of all liabilities is subtracted from the value of all assets.
money that owners receive if they sold all of a firms assets and paid all its liabilities.
Financial reports that summarize the financial conditions and operations of a business
A financial statement that reports assets, liabilities, and owner's equity on a specific date.
financial statement that supplies detailed information about a firms assets liabilities and owners equity
cash and other assets expected to be exchanged for cash or consumed within a year
A measure of the ease with which an asset can be converted into money without a significant loss of value.
Assets that are relatively permanent, such as land, buildings, and equipment.
accounting method for distributing the cost of an asset over its useful life.
(n.) a lessening in value; a belittling
long-term assets (e.g., patents, trademarks, copyrights) that have no real physical form but do have value
amount paid for an existing business above the value of its other assets.
a genuine interest or concern
Accounting Information system
The system of collecting and processing transaction data and communicating financial information to decision-makers.
Accounts payable (payables)
current liability consisting of bills owed to suppliers, plus wages and taxes due within the coming year
Any obligation of a business that is expected to be satisfied or paid in more than one year.
Paid in Capital
money that is invested in a company by its owners.
the amount stockholders have invested in the company
earnings retained by a firm fro its use rather than paid out as dividends
Income statement (profit and loss Statement)
financial statement listing a firm's annual revenues and expenses so that a bottom line shows annual profit or loss
the amount of money received from sales
Cost of Revenues
costs that a company incurs to obtain revenues from other companies
Cost of goods sold
The total cost of merchandise sold during the period.
costs of obtaining materials for making the products sold by a firm during the year
total money before taking out expenses or investments
net sales minus cost of goods sold
Expenses incurred in paying for the day-to-day activities of the business costs other than the cos of revenues incurred in producing a good or service
gross profit minus operating expenses
The excess of gross profit over total operating expenses; sometimes called income from operations.
Net income (net profit or Net earnings)
gross profit minus operating expenses and income taxes
Statement of Cash Flows
A financial statement that provides financial information about the cash receipts and cash payments of a business for a specific period of time. usually yearly
detailed statement of estimated receipts and expenditures for a future period of time.
formal recording and reporting of revenues at appropriate time
Reveal all information that will affect the decision making of creditors, investors, etc.
guideline that financial statements should not include just numbers but should also furnish managements interpretations and explanations of those numbers.
Measures a business's ability to meet long-term financial obligations (over one year).
measure the earnings or operating effectiveness of a company
The purpose of computing activity ratios is to assess management's ability to effectively utilize the company's assets
Short term solvency ratio
provide information about a firm's liquidity, sometimes called liquidity meausres. The primary concern is the firms ability to pay its bills over the short run without undue stress. these ratios focus on current assets and current liabilities.
measuring a company's ability to pay current debts out of current assets
company total liabilities
the use of borrowed money to supplement existing funds for purposes of investment
code of professional conduct
code of ethics for CPA's as maintained and enforced by the AICPA
International Accounting Standards Board (IASB)
organization responsible for developing a set of global global accounting standards and for gaining implementation of those standards.
Earnings per share
measures the net income earned per share of common stock