Module 2 - Week 2

Accounting System

A means by which accounting information about a business's activities is identified, measured, recorded, and summarized for reporting.

Management Accounting

Provides vital information about a business to internal users for planning, operating, and evaluating activities.

Financial Accounting

Organized information provided to external users, following specific guidelines known as GAAP.

GAAP

Generally Accepted Accounting Principles; standards that govern financial reporting.

Budgeting

The process of quantifying managers’ plans and showing the impact on operating activities and financial position.

Cost Analysis

Determining and evaluating the costs of specific products or activities within a business.

Profit

The difference between revenue and total expenses.

Solvency

A business’s long-term ability to pay its debts as they come due.

Income Statement

A financial statement that summarizes revenues, expenses, and net income over a specific period.

Balance Sheet

Summarizes a business's financial position at a given date, listing assets, liabilities, and owner’s equity.

Cash Flow Statement

A financial statement that shows how cash is generated and used during a specific time period.

Ethics in Accounting

Maintaining high ethical standards to ensure accurate financial reporting and decision making.

Critical Thinking

The process of evaluating ideas and determining effective solutions through analysis.

Professional Competence

Accountants must have the necessary skills and knowledge to perform their roles effectively.

Self-Management Skills

The ability to take responsibility for continuous personal and professional improvement.

Teamwork

Collaborating effectively with others to achieve common business goals.

Stakeholders

External users of financial information who rely on accounting data to make decisions about engaging with a business.

Environmental Sustainability

Business practices aimed at minimizing harm to the environment while maintaining profitability.

International Financial Reporting Standards (IFRS)

Global accounting guidelines used for financial reporting.

Internal Users

Individuals within a business, such as managers and teams, who use management accounting information.

External Users

Individuals outside a business, like investors and financial analysts, who use financial accounting information.