Thẻ ghi nhớ: Chapter 1: Conceptual Framework and Financial Statements

Balance Sheet

List of an entity's assets, liabilities, and owners' equity at a specific date. Also called the Statement of Financial Position.

Asset

Present economic resource controlled by an entity as a result of past events.

Generally Accepted Accounting Principles

(GAAP) Accounting guidelines, usually in reference to U.S. standards as formulated by the Financial Accounting Standards Board.

Income

Increases in equity as a result of increase in asset or decrease in liability, excluding transactions with owners in their capacity as owners.

Double-entry system

A system of recording business transactions where every financial transaction has equal amounts of debits and credits recorded in at least two accounts.

Proprietorship

A business with a single owner.

Operating profit

Profit reported after subtracting other operating expenses from gross profit.

Financial accounting

The branch of accounting that provides financial information to people outside the reporting entity, prepared based on financial reporting standards.

Accounting

The information system that measures business activities, processes that information into reports and financial statements, and communicates the results to decision makers.

Recognition

The process of capturing an item that meets the definition of an asset, a liability, equity, income or expense onto the financial statements.

Going concern

An assumption that an entity will remain in operation for the foreseeable future.

Paid-in capital

The amount of shareholders' equity that shareholders have contributed to the corporation.

Expense

The cost of doing business; result of decrease of assets or increase in liability, excluding transactions with owners in their capacity as owners.

Accrual basis

Business transactions and other events are recognized when they occur and not when cash is received or paid.

Financing activities

Activities that obtain from investors and creditors the cash needed to launch and sustain the business; a section of the Statement of Cash Flows.

Statement of Changes in Equity

Provides a reconciliation of the movement of equity items during a financial period. Affected share issuance, share cancellation, net income (or net loss), and dividends paid.

Statement of Financial Position

Another name for the Balance Sheet.

Investing activities

Activities that increase or decrease the long-term assets available to the business; a section of the Statement of Cash Flows.

Management accounting

The branch of accounting that generates information for the internal decision makers of a business, such as top executives.

Corporation

A business owned by shareholders. A corporation is a legal entity, an "artificial person" in the eye of the law.

Statement of Cash Flows

Reports cash receipts and cash payments classified according to the entity's major activities: operating, investing, and financing.

Equity

The residual interest in the assets of an entity after deducting all its liabilities. Also called owners' or shareholders' equity or net assets.

Shareholders

A person who owns shares in a corporation.

Losses

Usually separated from expenses; result in a reduction in equity.

Share capital

Proof of ownership in a company. Amount invested by owners into the business through share ownership.

Gains

Usually separated from revenues; reported in net basis (i.e., proceeds netted with costs). Part of income and result in an increase in equity.

Accounting equation

The most basic relationship in accounting: Assets = Liabilities + Equity, or Assets − Liabilities = Equity. Also Revenue − Expenses = Profit (Loss).

General purpose financial statements

The common set of financial statements prepared for all users of financial statements.

Income Statement

A financial statement listing an entity's revenues, expenses, and net income or net loss for a specific period. Part of the Statement of Comprehensive Income.

Conceptual Framework

The basic objective, principles and assumptions guiding the presentation and preparation of general purpose financial statements.

Cash

Money or any medium of exchange that is accepted as legal tender at face value.

Statement of Financial Performance

Another name for Income Statement.

Revenue

Increase in retained earnings from delivering goods or services to customers or clients.

Partnership

An association of two or more persons who co-own a business for profit.

Operating activities

Activities that create revenue or expense in the entity's major line of business; a section of the Statement of Cash Flows.

Reporting entity

An organization or a section of an organization that, for accounting purposes, stands apart from other organizations and individuals as a separate economic unit.

Dividends

Distributions (usually in the form of cash) by a corporation to its shareholders.

Liability

A present obligation of an entity to transfer an economic resource as a result of past events.

International Financial Reporting Standards

(IFRS) Accounting guidelines, formulated by the International Accounting Standards Board (IASB).

Economic phenomena

Information about the reporting entity's economic resources, claims against the reporting entity, and the effects of transactions and other events and conditions that change those resources and claims.

International Accounting Standards Board

(IASB) A board formed to replace the International Accounting Standards Committee (IASC).

Gross profit

Sales revenue minus cost of goods sold

Economic resource

A right that has the potential to produce economic benefits.

Current assets

An asset that is expected to be converted to cash, sold, or consumed during the next 12 months.

Current liabilities

A debt due to be paid within one year.

Retained earnings

The amount of shareholders' equity that the corporation has earned through profitable operation that has been retained in the business (not distributed back to shareholders).

Property, plant, and equipment

(PPE) Long-lived assets, such as land, buildings, and equipment, used in the operation of the business. Also called fixed assets or plant assets.

Materiality

The importance or significance of information that may change the user's final assessment of a situation.

Net income

Excess of total revenues over total expenses. Also called net earnings or net profit.

Financial statements

Specific financial information about a reporting entity that reports elements of financial statements, i.e., assets, liabilities, equity, income, and expenses.

Net loss

Excess of total expenses over total revenues.

Ethics

Standards of right and wrong that transcend economic and legal boundaries. Ethical standards deal with the way we treat others and restrain our own actions because of the desires, expectations, or rights of others, or with our obligations to them.

Qualitative characteristics

The attributes that are most likely to make the information provided in financial statements useful to users.