Introduction to Accounting

These flashcards cover key vocabulary and concepts related to the introduction of accounting, including definitions and distinctions between types of businesses and users of financial statements.

Accounting

The process of identifying, measuring, recording, and communicating economic information about an entity.

Bookkeeping

The mechanical aspects of accounting involving the recording, classifying, and summarizing of business transactions.

Financial Statements (FS)

Reports that provide information on the financial status of a business, including profits, losses, and decisions for corrective actions.

Internal Users

Individuals within a business such as owners, management, and employees who use accounting information for decision making.

External Users

Individuals outside a business, such as investors, creditors, and government agencies, who use accounting information for various purposes.

Sole Proprietorship

A type of business owned and run by one individual, with full control and unlimited liability.

Partnership

A type of business owned by two or more individuals, sharing profits, losses, and responsibilities as per their agreement.

Limited Company

A type of business structure where the owners have limited liability and the company is a separate legal entity.

Unlimited Liability

A situation where the owners of a business are personally responsible for all the debts and obligations of the business.

Limited Liability

A legal structure where the owners' personal assets are protected from the business's debts and liabilities.