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| The information system that identifies, records, and communicates the economic events of an organization to interested users. |
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| A report prepared by corporate management that presents financial information including financial statements, notes, a management discussion and analysis section, and an independent auditor's report. |
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| Resources owned by a business. |
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| A report prepared by an independent outside auditor stating the auditor's opinion as to the fairness of the presentation of the financial position and results of operations and their conformance with generally accepted accounting standards. |
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A financial statement that reports the assets and claims to those assets at a specific point in time.
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| Basic accounting equation |
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| Assets = Liabilities + Stockholders' Equity |
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| Certified Public Accountant (CPA) |
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| An individual who has met certain criteria and is thus allowed to perform audits of corporations. |
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| total amount paid in by stockholders for the shares they purchase. |
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| A business organized as a separate legal entity having ownership divided into transferable shares of stock. |
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| Payments of cash from a corporation to its stockholders. |
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| The cost of assets consumed or services used in the process of generating revenues. |
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A financial statement that presents the revenues and expenses and resulting net income or net loss of a company for a specific period of time.[image] |
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| The debts and obligations of a business. Liabilities represent the amounts owed to creditors. |
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| Management discussion and analysis (MD&A) |
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| A section of the annual report that presents management's views on the company's ability to pay near-term obligations, its ability to fund operations and expansion, and its results of operations. |
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| The amount by which revenues exceed expenses. |
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| The amount by which expenses exceed revenues. |
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| Notes to the financial statements |
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| Notes that clarify information presented in the financial statements, as well as expand upon it where additional detail is needed. |
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| A business owned by two or more persons associated as partners. |
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The amount of net income retained in the corporation.
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| Retained earnings statement |
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| A financial statement that summarizes the amounts and causes of changes in retained earnings for a specific period of time. |
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| The increase in assets that result from the sale of a product or service in the normal course of business. |
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| Regulations passed by Congress in 2002 to try to reduce unethical corporate behavior. |
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| A business owned by one person. |
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A financial statement that provides financial information about the
cash receipts and cash payments of a business for a specific period of time.[image] |
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The owners' claim to assets.
Stockholder's quity = Total Assets - Total Liabilites |
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| managers who need accounting information to plan, organize, and run business operations |
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investors and creditors
Other groups who have an indirect interest in a business are taxing authorities, customers, labor unions, and regulatory agencies. |
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| A type of External User - Investors (stockholders) use accounting information to help them decide whether to buy, hold, or sell shares of a company's stock. |
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| A type of External User - Creditors (suppliers and bankers) use accounting information to assess the risk of granting credit or loaning money to a business. |
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one of the three principal types of business activity
involve collecting the necessary funds to support the business |
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one of the three principal types of business activity
involve acquiring the resources necessary to run the business.
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one of the three principal types of business activity
involve putting the resources of the business into action to generate a profit. |
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