Accounting, Finance, and Corporate Governance Vocabulary

Vocabulary flashcards based on lecture material covering accounting concepts, business entity types, corporate governance roles, and regulatory entities.

Accounting

The recording, classifying, and summarizing of economic events to provide financial information used in decision making and to create financial statements.

Finance

The management of an organization's funds to ensure they are properly used to achieve its objectives, utilizing financial analysis data.

Financial Accounting

A branch of accounting that focuses on providing financial information about the entity as a whole to external parties using standard rules such as US GAAP and IFRS.

Managerial Accounting

A branch of accounting that provides financial information for internal management at a product or division level using accepted, but not strictly required, methods.

ESG

A framework measuring Environmental (e.g., carbon intensity, biodiversity), Social (e.g., human rights, health and safety), and Governance (e.g., board independence, business ethics) performance.

B Corp

A business designation for corporations—such as Patagonia and Ben & Jerry's—that integrate social and ethical responsibility into their goal alongside profit.

Corporation

A separate legal entity owned by stockholders via stock certificates that offers protection of personal assets and provides rights to vote, receive dividends, and share in asset appreciation.

Double Taxation

A tax situation faced by corporations where profits are taxed at the corporate level before distribution ($211\%$) and taxed again at the individual shareholder level ($15\%$) after dividends are disbursed.

Public Corporation

A corporation whose shares are offered to the public, actively traded on open markets, and regulated by the SEC and PCAOB.

Private Corporation

Also referred to as a non-public or non-issuer corporation, an entity whose shares cannot be legally offered to the general public without SEC registration and is usually held by a small number of shareholders.

Proprietorship

A simple business form owned by one person that is not a separate legal entity, provides no personal asset protection, requires no separate tax return, and ends upon the owner's death.

Partnership

A business form where partners can bind each other by action, personal assets can be used to cover losses, and tax obligations pass through to individual partners.

Limited Liability Corporation (LLC)

A business structure that functions like a partnership while providing protection for personal assets from business liabilities.

Board of Directors (BOD)

A corporate governance group made up of external experts who monitor executive management, represent investor interests, and hire external auditors.

Chief Financial Officer (CFO)

An executive responsible for controlling financial activities and publishing annual and quarterly financial reports.

Chief Executive Officer (CEO)

An executive responsible for leading the organization and handling disputes between the internal team and external parties.

Audit Committee

A committee within corporate governance that oversees financial reporting and is responsible for hiring and supervising external auditors.

Internal Auditor

An internal reviewer who identifies operational risks, looks for errors or fraud, and provides recommendations for corporate improvement.

External Auditor

An independent party who audits financial statements and internal controls, assesses risks of fraud, and provides an official audit opinion.

Securities and Exchange Commission (SEC)

A regulatory agency responsible for protecting investors and regulating public companies and securities markets.

Public Company Accounting Oversight Board (PCAOB)

A regulatory body that sets audit standards and oversees the auditors of public companies.