Untitled Flashcards Set

Accounting

A system for measuring and summarizing business activities, interpreting financial information, and communicating results to management and decision makers.

Management Accounting

Branch of accounting that provides information and analysis to decision makers inside the organization to help them operate the business.

Financial Accounting

Branch of accounting that furnishes information to individuals and groups both inside and outside the organization to help them assess the firm’s financial performance.

Generally Accepted Accounting Principles (GAAP)

A set of rules that financial accountants adhere to for accurate and comparable financial reporting.

International Financial Reporting Standards (IFRS)

An accounting standard used by companies outside the US for global consistency in financial reporting.

Breakeven Analysis

A method determining the level of sales at which the company will break even (have no profit or loss).

Assets

Resources from which a company expects to gain some future benefit.

Liabilities

Debts that a company owes to outside individuals or organizations.

Owner's Equity

The investment interest that owners have in their business.

Accrual Accounting

A system that records transactions when they occur, regardless of when cash is paid or received.

Inventory

Goods that a business has made or bought and expects to sell in normal operations.

Depreciation Expense

Cost of a long-term or fixed asset spread over its useful life.

Current Assets

Assets that a business intends to convert into cash within one year.

Fixed Costs

Costs that do not change as the amount of goods sold changes.

Variable Costs

Costs that vary as the quantity of goods sold changes but stay constant on a per-unit basis.

Contribution Margin per Unit

Excess of revenue per unit over the variable cost per unit.

Fiscal Year

A company's designated business year.

Statement of Cash Flows

Financial reporting on cash inflows and outflows resulting from operating, investing, and financing activities.

Sarbanes-Oxley Act (SOX)

A federal law enacted to encourage ethical corporate behavior and discourage fraud and other wrongdoing.