Chapter 15 - Accounting - Intro to Business

Accounting

comprehensive system for collecting, analyzing, and communicating financial information

Bookkeeping

recording of accounting transactions

Accounting Information System

organized procedure for identifying, measuring, recording, and retaining financial information for use in accounting statements and management reports

Controller

person who manages all of a firm’s accounting activities (chief accounting officer)

Certified Public Accountant (CPA)

Accountant licensed by the state and offering services to the public

Financial Accounting

field of accounting concerned with external users of a company’s financial information

Managerial Accounting

field of accounting that serves internal users of a company’s financial information

Audit

systematic examination of a company’s accounting system to determine whether its financial reports reliably represent its operations

Generally Accepted Accounting Principles (GAAP)

accounting guidelines that govern the content and form of financial reports

Tax Services

assistance provided by CPAs for tax preparation and tax planning

Management Advisory Services

assistance provided by CPA firms in areas such as financial planning, information systems design, and other areas of concern for client firms

Core Competencies for Accounting

the combination of skills, technology, and knowledge that will be necessary for the future CPA

Private Accountant

salaried accountant hired by a business to carry out its day-to-day financial activities

Management Accountant

private accountant who provides financial services to support managers in various business activities within a firm

Certified Management Accountant (CMA)

professional designation awarded by the Institute of Management Accountants (IMA) in recognition of management accounting qualifications

Forensic Accounting

the practice of accounting for legal purposes

Certified Fraud Examiner

professional designation administered by the
Association of Certified Fraud Examiners in recognition of qualifications for a specialty area within forensic accounting

Financial Statement

balance sheet, income statement, statement of cash
flows

Intangible Asset

nonphysical asset, such as a patent or trademark, that
has economic value in the form of expected benefit

Goodwill

amount paid for an existing business above the value
of its other assets

Revenue Recognition

formal recording and reporting of revenues at the
appropriate time

Full disclosure

guideline that financial statements should not include
just numbers but should also furnish management’s
interpretations and explanations of those numbers

Solvency Ratio

financial ratio, either short- or long-term, for estimating
the borrower’s ability to repay debt

Profitability Ratio

financial ratio for measuring a firm’s potential earnings

Activity ratio

financial ratio for evaluating management’s efficiency in
using a firm’s assets

Short-Term Solvency Ratio

financial ratio for measuring a company’s ability to pay
immediate debts

Current Ratio

financial ratio for measuring a company’s ability to pay
current debts out of current assets