Chapter 1 Into 1

Accounting

The process of recording and organizing financial information.

Timeliness

Data must be current to be useful in financial statements.

Accuracy

Data must be correct and precise in financial statements.

Comparability

Data should allow for easy comparison across time and entities.

Usability

Information must be understandable and actionable.

Internal Users

Users such as managers who use data for budgeting and decision-making.

External Users

Users such as investors and creditors who evaluate profitability and assess creditworthiness.

GAAP

Generally Accepted Accounting Principles, U.S. standards for consistent financial reporting.

Sarbanes-Oxley Act (SOX)

Regulation focusing on preventing fraud and improving accountability in financial reporting.

Financing Activities

Actions related to sourcing money to fund the business.

Investing Activities

Actions that involve spending money to grow or maintain the business.

Operating Activities

Core activities of the business that include revenues and expenses.

Assets

Resources owned by a business that have value.

Liabilities

Obligations or debts that a business owes to others.

Equity

Ownership value in a business.

Revenues

Money earned from core operations.

Expenses

Costs incurred to generate revenue.