UNIT 13: ACCOUNTING AND FINANCIAL STATEMENTS

Cost accounting

calculating all the expenses involved in producing something, including materials, labour, and all other expenses

Tax accounting

calculating how much an individual or a company will have to pay to the local and national governments (and trying to reduce this to a minimum)

Auditing

inspecting and reporting on accounts and financial records

Accounting

preparing financial statements showing income and expenditure, assets and liabilities

Managerial/management accounting

providing information that will allow a business to make decisions, plan future operations and develop business strategies

Creative accounting

using all available accounting procedures and tricks to disguise the true financial position of a company

Bookkeeping

writing down the details of transactions (debits and credits)

Cash flow statement

a statement giving details of money coming into and leaving the business, divided into day-to-day operations, investing and financing

Income statement = Statement of income = Profit and loss statement = Profit and loss account

a statement showing the difference between the revenues and expenses of a period

Balance sheet = Statement of financial position

a statement showing the value of a business’s assets, its liabilities, and its capital or shareholders’ equity (money the business has that belongs to its owners).

Assets

economic resources that are owned or controlled by the company.

Liabilities

claims of creditors on a company’s assets.

Accounts Receivable

a current asset representing money due for services performed or merchandise sold on credit.

Accounts Payable

dollar value owed by a firm to others.

Intangible Assets

long-lived assets with no physical substance that are used in the business such as acquired goodwill, licenses, patents and franchises.

Contributed Capital

portion of owners’ net equity contributed by investor (the owners) in exchange for shares of stock.

Dividends

profit distributions to the owners (stockholders).

Retained Earnings

portion of a company’s owners’ equity that has been earned from profitable operations but has not been distributed to shareholders as dividends.

Stockholders’ Equity

owners’ equity section–‘what’s left over’