Accounting 2013 Class Notes, 8E - Vocabulary Flashcards

VOCABULARY flashcards covering key terms from balance sheets, financial statements, GAAP/IFRS, and ethics.

Balance Sheet

A financial statement showing assets, liabilities, and stockholders' equity at a specific date; Assets = Liabilities + Stockholders' Equity.

Assets

Resources controlled by the company expected to provide future economic benefits; listed in order of liquidity on the balance sheet.

Liabilities

Obligations the company owes to outsiders; listed by due date on the balance sheet.

Stockholders' Equity

Claims of the owners on the company’s assets; includes common stock and retained earnings.

Retained Earnings

Accumulated net income minus dividends; part of stockholders' equity reported on the balance sheet.

Income Statement

Financial statement that reports revenues and expenses to determine net income for a period.

Statement of Retained Earnings

Financial statement showing changes in retained earnings during a period (beginning balance, add net income, subtract dividends).

Net Income

Revenues minus expenses; increases retained earnings.

Cash

Most liquid asset; cash on the balance sheet equals ending cash on the statement of cash flows.

Accounts Receivable

Amounts owed by customers who bought on credit; asset.

Accounts Payable

Amounts owed to suppliers for purchases on credit; liability.

Notes Payable

Written promissory notes or loans payable; liability.

Equipment

Long‑term tangible assets used in operations; part of assets.

Supplies

Consumable items used in operations; asset until consumed.

Supplies Expense

Expense recorded for supplies used during the period.

Advertising Expense

Expense representing costs of promoting goods/services.

Sales Revenue

Income from goods or services sold; increases revenues.

Common Stock

Equity representing ownership shares issued; part of stockholders' equity.

Dividends

Distributions of earnings to shareholders; reduce retained earnings.

GAAP

Generally Accepted Accounting Principles; US accounting standards.

IFRS

International Financial Reporting Standards; global accounting standards.

IASB

International Accounting Standards Board; develops IFRS.

FASB

Financial Accounting Standards Board; sets US GAAP.

Ethics

Standards of conduct for judging right from wrong in professional practice.

Code of Professional Conduct

Ethical rules CPAs follow to maintain professional behavior (e.g., AICPA Code).

External Financial Reporting

Providing financial statements to external users such as investors and creditors.

Relevance

Quality of information that makes a difference in decision making.

Faithful Representation

Information that faithfully represents economic events: complete, neutral, and free from error.