Accounting Vocabulary Chapter 1
Terms in this set (25)
the process by which companies produce their financial statements for a specific period
Assets = Liabilities + Owner's Equity
Also cation of the cost of an intangible asset over its service life
states that businesses are assumed to continue into the foreseeable future
items that can or will be converted into cash within one year
liabilities due within a short time, usually within a year
fair value principle
assets and liabilities should be reported at fair value (the price received to sell an asset or settle a liability)
Financial Accounting Standards Board (FASB)
the private board that establishes the generally accepted accounting principles used in the practice of financial accounting (GAAP)
Activities that obtain from investors and creditors the cash needed to launch and sustain the business; a section of the statement of cash flows.
Generally Accepted Accounting Principles (GAAP)
Accounting guidelines, currently formulated by the Financial Accounting Standards Board (FASB); the main U.S. accounting rule book.
Going Concern Assumption
The assumption that the company will continue in operation for the foreseeable future.
Excess of the cost of an acquired company over the sum of the market values of its net assets (assets minus liabilities).
Historical Cost Principle
principle that states that assets should be recorded at their actual cost
A financial statement listing an entity's revenues, expenses, and net income or net loss for a specific period. Also called the statement of operations.
assets with no tangible form that represent resources that have a value and future benefit
International Financial Reporting Standards (IFRS)
Accounting guidelines, formulated by the International Accounting Standards Board (IASB)
Activities that increase or decrease the long-term assets available to the business; a section of the statement of cash flows.
long term assets
assets that produce tangible benefits for more than one year; investments, PP&E, intangible assets
activities that create revenue or expense in the entity's business; a section of the statement of cash flows, and affect the income statement
Paid in capital
The amount of stockholders' equity that stockholders have contributed to the Corp.
An amount earned by a corporation through profitable operations and not yet distributed to stockholders.
A division of a business' operations
stable monetary unit assumption
The reason for ignoring the effect of inflation in the accounting records, based on the assumption that the dollar's purchasing power is relatively stable.
Statement of Cash Flows
reports cash receipts and cash payments classified according to the entity's major activities: operating, investing, and financing.
Statement of Retained Earnings
Summary of changes in the retained earnings of a Corp during a specific period