Accounting and Financial Statements

These flashcards cover key concepts and terminology related to accounting and financial statements important for understanding financial reporting and management.

Accounting

The recording, measurement, and interpretation of financial information.

Certified Public Accountant (CPA)

An individual who has been certified by the state to provide accounting services.

Generally Accepted Accounting Principles (GAAP)

The standards and guidelines for financial accounting used in the private sector.

Public Accountant

An accountant who provides services to the public, including audits and tax preparation.

Private Accountant

An accountant who works for a specific organization preparing and analyzing financial statements.

Forensic Accounting

Accounting that involves analyzing financial documents for legal purposes, especially to detect fraud.

Managerial Accounting

The internal use of accounting statements by managers in planning and directing an organization’s activities.

Cash Flow

The movement of money through an organization over a specific period.

Budget

An internal financial plan that forecasts expenses and income over a set period of time.

Income Statement

A financial report that shows an organization’s profitability over a period of time.

Balance Sheet

A financial statement that presents an organization’s financial position at a specific point in time.

Double-entry Bookkeeping

A method of accounting in which each transaction affects at least two accounts to maintain the balance of the accounting equation.

Accounting Cycle

The series of steps involved in recording and processing financial transactions.

Net Income

The amount of income left after all expenses have been deducted from revenue.

Financial Ratios

Calculations that measure an organization’s financial health by comparing different financial figures.

Profitability Ratios

Ratios that measure an organization’s ability to generate income relative to its revenue, assets, or equity.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations.

Debt to Total Assets Ratio

A measure of how much of a firm's assets are financed by debt.

Earnings Per Share (EPS)

The portion of a company's profit allocated to each outstanding share of common stock.

Dividends Per Share

The amount of cash a company distributes to its shareholders for each share owned.