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Terms in this set (29)
An information and management system that identifies, records and communicates information about an organization's business activities
Outside of the company (lenders, shareholders, directors, external auditors, labor unions, regulators, voters, suppliers, customers)
Employees of the company (research and development managers, purchasing managers, human resource managers, production managers, distribution managers)
A moral judgement (right vs wrong)
Procedures set up to protect company property and equipment, ensure reliable accounting, promote efficiency, encourage adherence to policies.
Sarbanes Oxley Act (SOX)
Law enacted to protect investors from fraud.
Generally Accepted Accounting Principles (GAAP)
Main guidelines for accounting in USA, these are the rules, help to make information relevant, reliable, comparable.
FASB's conceptual framwork
Recognition and Measurement, elements, qualitative characteristics, objectives of financial accounting.
Accounting information is based on cost, emphasizes reliability and verifiability.
Revenue Recognition Principle
Identifies when revenue is recorded, at the expected amount to be received.
Expense Recognition Principle
Expenses for generating revenue must be recorded, same time period as when revenue is recorded.
Full Disclosure Principle
Report to users and information that is not on financial statements that they need to know.
Going Concern Assumption
Company will continue to stay in business indefinitely.
The Monetary Unit Assumption
All financial information reported by the company is measured in terms of a monetary unit, in US, companies distribute financial reports on US dollar.
Time Period Assumption
A company's life can be broken down into time periods.
Business Entity Assumption
A business entity that records and reports transactions separately from others and its owners as a separate economic entity.
Only information that would make a difference to a decision needs to be disclosed.
Cost Benefit Constraint
Only information with benefit of disclosure that is more than the cost of providing it needs to be disclosed.
Economic resource, provides future benefits, something the company owns.
Something owed, debts owed to creditors.
The company's net worth, represents owners' interest in the company, what is left over from the assets after the liabilities have been paid.
Increase equity from sales of products and services to customers. (sales of products)
Decrease equity from costs of providing products and services to customers. (salary)
The outflow of resources such as cash and other assets to stockholders.
Paid in Capital (contributed capital)
The total amount of cash and other assets the corporation receives from its stockholders in exchange for its stock.
Cumulative net income (and loss) not distributed as dividends to its stockholders.
Transactions producing revenue or expense.
Transactions involving purchase or sale of long-term assets.
Transactions involving creditors or owners.
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