Create an account
the information system that measures business activities, processes that information into reports and financial statements, and communicates the results to decision makers
board of directors
group elected by the stockholders to set a policy for a corporation and to appoint its officers
a business owned by stockholders. a corporation is a legal entity, an "artificial person" in the eyes of the law
an asset that is expected to converted into cash, sold, or consumed during the next 12 months, or within the business's normal operating cycle if longer than a year
an organization or a section of an organization that, for accounting purposes, stands apart from other organizations and individuals as a separate economic unit
standards of right and wrong that transcend economic and legal boundaries. ethical standards that deal with the way we treat others and restrain our own actions because of the desire, expectations, or rights of others, or with our obligations to them
decrease in retained earnings that results from operations; the cost of doing business; opposite of revenues
the amount that a business could sell an asset for, or the amount that a business could pay to settle a liability
the branch of accounting that provides information to people outside of the firm
business documents that report financial information about a business entity to decision makers
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
accounting guidelines, formulated by the financial accounting standards board, that govern how accounting is practiced
historical cost principle
principle that states that assets and services should be recorded as their actual cost
a financial statement listing an entity's revenues, expenses, and net income or net loss for a specific period
activities that increase or decrease the long-term assets available to the business; a section of the statement of cash flows
an economic obligation payable to an individual or an organization outside of the business
the branch of accounting that generates information for the internal decision makers of a business, such as top executives
activities that create revenue or expense in the entity's major line of business; a section of the statement of cash flows
the amount of stockholders' equity that stockholders have contributed to the corporation
the amount of stockholders equity that the corporation has earned through profitable operation and has not given back to stockholders
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 the changes in retained earnings of a corporation during a specific period
the record of the changes that have occurred in a particular asset, liability, or stockholders' equity during a period. the basic summary device of accounting.
a balance sheet format that lists assets on the left and liabilities and stockholders' equity on the right
accounting that records the impact of a business event as it occurs, regardless of whether the transaction affected cash or not
the cumulative sum of all depreciation expense from the date of acquiring a plant asset
classified balance sheet
a balance sheet that shows current assets separate from long-term assets, and current liabilities separate from long-term liabilities
closing the books
the process of preparing the accounts to begin recording the next period's transactions.
entries that transfer the revenue, expense, and dividends balances from the respective accounts to the retained earnings account
an account that always has a companion account whose normal balance is opposite that of the companion account
current assets divided by current liabilities. measures a company's ability to pay current liabilities with current assets
ratio of total liabilities to total assets. states the proportion of a company's assets that is finalized with debt
the basis for recording expenses. directs accountants to identify all expenses incurred during the period, to measure the expenses, and to match them against the revenues earned during the same period
multi-step income statement
an income statement that contains subtotals to highlight important relationships between revenues and expenses
time span during which cash is paid for goods and services that are sold to customers who pay the business in cash
assets, liabilities, and stockholders' equity accounts that are not closed at the end of the period
a category of miscellaneous assets that typically expire or get used up in the near future
the basis of recording revenues; tells accountants when to record revenue and the amount of revenue earned
a liability created when a business collects cash from customers in advance to earning the revenue
a periodic examination of a company's financial statements and the accounting systems, controls, and records that produce them. audits may be either external or internal.
a document explaining the reasons for the difference between a depositor's records and the bank's records about the depositor's cash
document showing the beginning and ending balances of a particular bank account listing the month's transactions that affected the account
investments such as time deposits, certificated of deposits, or high-grade government securities that are considered so similar that they are combined with cash for financial disclosure purposes on the balance sheet
document instructing a bank to pay the designated person or business the specified amount of money
a malicious program that enters a company's computer system via email or other means and destroys program and data files
electronic fund transfer
system that transfers cash by electronic communication rather than by paper documents
mathematical rearranging of data within an electronic file to prevent unauthorized access to information
identifying data that is not within "normal limits" so that managers can follow up and take corrective action.
an electronic barrier, usually provided by passwords, around computerized data files to protect local area networks of computers from unauthorized access
an intentional misrepresentation of facts, made for the purpose of persuading another party to act in a way that causes injury or damage to that party
the three elements that are present in almost all cases of fraud. these elements are motive, opportunity, and rationalization on the part of the perpetrator
organizational plan and related measures adopted by an entity to safeguard assets, encourage adherence to company policies, promote operational efficiency, and ensure accurate and reliable accounting records
a fraudulent scheme to steal cash trough misappropriating certain customer payments and posting payments from other customers to the affected accounts to cover it up.
a system of handling cash receipts by mail whereby customers remit payment directly to the bank, rather than through the entity's mail system
nonsufficient funds check
a check for which the payer's bank account has not enough money to pay the check
a check issued by the company and recorded by its books but not yet paid by its bank
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