ACCTNG 211

Term: Corporation. Definition: A legal form for a business that separates the owners from the business.

Term: Retained Earnings. Definition: The accumulated net income of a company over its life reduced by the total dividends paid to owners during its life; represents

cumulative earnings that have been kept in the company; represents the earned portion of the owners' claims.

Term: Statement of Changes in Stockholders' Equity. Definition: A financial statement that shows changes in the balances of contributed capital and retained earnings

during a fiscal period.

Term: Cash Flow from Operating Activities. Definition: Cash transactions related to the ordinary conduct of business e.g., receipts from services performed; payments to

employees; payments to vendors.

Term: Capital. Definition: Resources used to start a business.

Term: Balance Sheet. Definition: A record of a company's financial position at a particular point in time.

Term: Net Income. Definition: Residual from the deduction of all expenses from all revenues.

Term: Liabilities. Definition: Amounts a company owes to parties outside the business e.g., loans; unpaid salaries; supplies purchased on credit.

Term: Cash Flow From Financing Activities. Definition: Cash transactions related to the financing of a business, e.g., issuance of stock to owners; repayment of loan principal.

Term: Cash Flow From Investing Activities. Definition: Cash transactions that involve the acquisition and disposal of long-term assets used in a business e.g., sale of

equipment; purchase of land.

Term: Expenses. Definition: The costs of generating revenue e.g., advertising, rent, salaries.

Term: Comparative Balance Sheets. Definition: Side-by-side reporting of consecutive fiscal period balance sheets.

Term: Stock Exchange (Market). Definition: Marketplace where buyers and sellers exchange their shares of stock (including the Internet).

Term: Multi-Step Income Statement. Definition: Income statement structured as follows:

. Sales

. Less: Cost of Goods Sold

. Gross Profit

. Less: Operating Expenses

. Net Income.

Term: Statement of Cash Flows. Definition: A financial statement that shows all cash collected and disbursed during a fiscal period; cash flows are categorized as operating,

investing, or financing

Term: Fiscal Year. Definition: A year in the life of a business e.g., January 1 - December 31; October 1 - September 30; February 1 - January 31.

Term: Manufacturing Company. Definition: Companies that produce the goods they sell e.g., Ford Motor (automobiles); Apple (computers); Proctor & Gamble

(household products).

Term: Generally Accepted Accounting Principles (GAAP). Definition: Guidelines for financial reporting.

Term: Shareholders. Definition: Owners of a corporation.

Term: Assets. Definition: Things of value owned or controlled by a business e.g., cash; inventories; buildings.

Term: Stockholders' (Shareholders') Equity. Definition: Owners' claims to the assets of a company; comprised of contributed capital and retained earnings.

Term: Shares of Common Stock. Definition: Units of ownership in a corporation.

Term: Net Loss. Definition: Description of negative net income.

Term: Interest. Definition: The cost of borrowing money.

Term: Merchandising Company. Definition: Companies that sell others' products to their customers e.g., Target (big box retail); Macy's (department store); Best Buy (electronics)

Term: Contributed Capital. Definition: An owner's investment in a company.

Term: Service Company. Definition: A company that does something for its customers e.g., Ameritrade (online brokerage); PricewaterhouseCoopers (accounting &

auditing); McKinsey & Co. (management consulting).

Term: Dividends. Definition: Distributions of a corporation's earnings to owners.

Term: Revenue (Sales). Definition: The amount a company earned from providing goods or services.