Acct Bus Env

Accounting

Accounting

The information system that measures business activities, processes the information into reports, and communicates the results to decision makers.

Accounting Equation

The basic tool of accounting, measuring the resources of the business (what the business owns or has control of) and the claims to those resources (what the business owes to creditors and to the owners). Assets = Liabilities + Equity.

Accounts Payable

A short-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 stockholders' equity of the business as of a specific date.

Certified Financial Planner

(CFP) Certified professional who specializes in budgeting, planning for retirement, and managing finances.

Certified Management Accountant

(CMAs) Professional accountants who specialize in accounting and financial management knowledge.

Certified Public Accountant

(CPAs) Licensed professional accountants who serve the general public.

Chartered Global Management Accountant

(CGMA) Professional accountant with advanced knowledge in finance, operations, strategy, and management.

Common Stock

Represents the basic ownership of a corporation.

Contributed Capital

Owner contribution to a corporation

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.

Dividend

A distribution of a corporation's earnings to stockholders.

Economic Entity Assumption

An organization that stands apart as a separate economic unit.

Equity

The owners' claims to the assets of the business.

Expenses

The costs of selling goods or services.

Faithful Representation

Providing information that is complete, neutral, and free from error.

Financial Accounting

The field of accounting that focuses on providing information for external decision makers.

Financial Accounting Standards Board

(FASB) The private organization that oversees the creation and governance of accounting standards in the United States.

Financial Statements

Business documents that are used to communicate information needed to make business decisions.

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

Assumes that the entity will remain in operation for the foreseeable future.

Income Statement

Reports 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).

Liabilities

Debts that are owed to creditors

limited-liability company

(LLC) A company in which each member is only liable for his or her own actions.

Managerial Accounting

The field of accounting that focuses on providing information for internal decision makers.

Monetary Unit Assumption

The assumption that requires the items on the financial statements to be measured in terms of a monetary unit.

Net Income

The result of operations that occurs when total revenues are greater than total expenses.

Net Loss

The result of operations that occurs when total expenses are greater than total revenues.

partnership

A business with two or more owners and not organized as a corporation.

Public Company Accounting Oversight Board

(PCAOB) Monitors the work of independent accounts who audit public companies.

Retained Earnings

Equity earned by profitable operations of a corporation that is not distributed to stockholders.

Return on Assets

(ROA) Measures how profitably a company uses its assets. Net income/ Average total assets.

Revenues

Amounts earned from delivering goods or services to customers.

Sarbanes-Oxley Act

(SOX) Requires companies to review internal control and take responsibility for the accuracy and completeness of their financial reports.

Securities and Exchange Commission

( SEC) U.S. government agency that oversees the U.S. financial markets.

Sole Proprietorship

A business with a single owner.

Statement of Cash Flows

Reports how the company's retained earnings balance changed from the beginning to the end of the period.

Statement of Retained Earnings

Reports how the company's retained earnings balance changed from the beginning to the end of the period.

Stockholder

A person who owns stock in a corporation.

Transaction

An event that effects the financial position of the business and can be measured with faithful representations.