Upgrade to remove ads
Only $2.99/month

Accounting 1010 Chapter 1 A

Terms in this set (30)

Why is accounting important
It's the language of business
Accounting is used by decision makers including:
individuals, businesses, investors, creditors, and taxing authorities.
Accounting can be divided into two major fields
financial accounting and managerial accounting
Financial accounting
is used by external decision makers.
Managerial accounting
is used by internal decision makers
Accountants work in
private, public and governmental jobs
Accountants can be licensed as either a
Certified Public Accountant (CPA) or Certified Management Accountant (CMA)
Generally Accepted Accounting Principles (GAAP)
are the rules that govern accounting in the United States. (accounting rule book), currently formulated by the Financial Accounting Standards Board (FASB)
The Financial Accounting Standards Board (FASB) (f/p)
The private organization the oversees the creation and governance of accounting standards in the US.
GASB
Governmental Accounting Standards Board
Economic entity assumption
Requires an organization to be a separate economic unit such as a sole proprietorship, partnership, corporation, or limited-liability company. OR An organization that stands apart as a separate economic unit.
Accounting
The information system that measures business activities, processes the information into reports, and communicates the results to decision makers.
Accounting equation
Assets=Liabilities+Equity
The basic tool of accounting, measuring the resources of the business (what the business owns or has control of) and the claims to thos resources (what the business owes to creditors and to the owner).
Accounts Payable
A shot-term liability that will be paid in the future.
Accounts Receivable
The right to receive cash in the future from customers for goods sold or for services performed.
Assets
Economic resources that are expected to benefit the business in the future. Something the business owns or has control of.
Audit
An examination of a company's financial statements and records.
Balance Sheet
Reports on the assets, liabilities, and owner's equity of the business as of a specific date.
Certified Management Accountants (CMAs)
Certified professionals who specialize in accounting and financial management knowledge. They typically work for a single company.
Certified Public Accountants (CPAs)
Licensed professional accountants who serve the general public.
Corporation
A business organized under state law that is a separate legal entity.
Cost Principle
A principle that states that acquired assets and services should be recorded at their actual cost.
Creditor
Any person or business to whom a business owes money.
Equity
The owners claim to the assets of the business.
Expenses
The cost of selling goods or services.
Generally Accepted Accounting Principles (GAAP)
Accounting guidelines, currently formulated by the FASB, the main U.S. accounting rule book.
Financial Staements
Business documents that are used to communicate information needed to make business decisions.
Going Concern Assumption
Assumes that the entity will remain in operation for the foreseeable future.
Income Statement
Report the net income or net loss of the business for a specific period.
International Accounting Standards Board (IASB)
The private organization that oversees the creation and governance of International Financial Reporting Standards (IFRS)
THIS SET IS OFTEN IN FOLDERS WITH...