ACG 2021 Block 1 Definitions - Chapter 1

Financial Accounting

measure business activities of a comp & communication of those measurements to external parties for decision-making purposes

Accounting Equation

equation that shows a comps resources (assets) = creditors & owners claims to those resources (liabilities & stockholders equity)

Generally Accepted Accounting Principles (GAAP)

the rules of financial accounting

Assets

resources owned by the comp

Liabilities

amounts owed to creditors

Stockholders Equity

owners claims to resources

Revenues

amounts earned from selling products/services to customers

Expenses

costs of providing products/services

Business Transaction

econ event that initiates the accounting process of recording it in the comps accounting system

Accounting Period

specific time pd (beginning to end) for which the accounts are measured, aggregated & at the end, financial statements are prepped

Account

summary of the effects of all transactions related to a particular item over a pd of time

Chart of Accounts

list of all account names used to record transactions of a comp

Financial Statements

periodic reports published by the comp for the purpose of providing info (communicate) to external users

Income Statement

financial statement that reports the comps revs/exps over an interval of time

Statement of Stockholder's’ Equity

financial statement that summarizes the changes in stockholders’ equity over an interval of time

Balance Sheet

financial statement that presents the financial position of the comp on a particular date

Statement of Cash Flows

financial statement that measures activities involing cash receipts & cash payments over an interval of time

Cash

liquid assets owned by the comp (debit, asset, balance sheet)

Accounts Receivable

amounts the comp expects to collect from customers based on the delivery of service/products

Prepaid Expenses

costs of assets acquired in 1 pd that will be expensed in a future pd

Inventory

the cost of the merchandise purchased but not yet sold to customers

Supplies

the cost of supplies (Pens, paper, toner) used in the operation of a business

Accounts Payable

promise to pay cash in the future to creditors when purchasing supplies/materials (credit, liability, balance sheet)

Notes Payable

total amounts owed to creditors for loaning $ to the comp

Deferred Revenune

cash in advance from a customer for products/services to be provided in the future

Common Stock

amount shareholders have invested in the business (credit, stockholders’ equity, balance sheet)

Retained Earnings

cumulative amount of net income earned over the life of the comp that has not been distributed to stockholders as dividends

Net Income

the difference btwn revs/exps (calculation: revs - exp = income statement)

Dividend

cash payments to stockholders (Owners)

* debit, no major category, statement of stockholders equity)