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Financial & Managerial Accounting
Chapter 1 Definition
44
Accounting
Intermediate
06/01/2019

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Term
Accounting
Definition
The information system that measures business activities, processes the information into reports, and communicates the results to decision makers.
Term
Financial Accounting
Definition
The field of accounting that focuses on providing information for external decision makers.
Term
Certified Management Accountants (CMAs)
Definition
Certified professionals who specialize in accounting and financial management knowledge. They typically work for a single company.
Term
Managerial Accounting
Definition
The field of accounting that focuses on providing information for internal decision makers.
Term
Certified Public Accountants (CPAs)
Definition
Licensed professional accountants who serve the general public.
Term
Creditor
Definition
Any person or business to whom a business owes money.
Term
Economic Entity Assumption
Definition
An organization that stands apart as a separate economic unit.
Term
Faithful Representation
Definition
Providing information that is complete, neutral, and free from error.
Term
Financial Accounting Standards Board (FASB)
Definition
The private organization that oversees the creation and governance of accounting standards in the United States.
Term
Generally Accepted Accounting Principles (GAAP)
Definition
Accounting guidelines, currently formulated by the Financial Accounting Standards Board (FASB); the main U.S. accounting rule book.
Term
Securities and Exchange Commission (SEC)
Definition
U.S. governmental agency that oversees the U.S. financial markets.
Term
Corporation
Definition
A business organized under state law that is a separate legal entity.
Term
Limited-Liability Company
Definition
A company in which each member is only liable for his or her own actions.
Term
Partnership
Definition
A business with two or more owners and not organized as a corporation.
Term
Sole Proprietorship
Definition
A business with a single owner.
Term
Stockholder
Definition
A person who owns stock in a corporation.
Term
Cost Principle
Definition
A principle that states that acquired assets and services should be recorded at their actual cost.
Term
Audit
Definition
An examination of a company's financial statements and records.
Term
Going Concern Assumption
Definition
Assumes that the entity will remain in operation for the foreseeable future.
Term
International Accounting Standards Board (IASB)
Definition
The private organization that oversees the creation and governance of International Financial Reporting Standards (IFRS).
Term
International Financial Reporting Standards (IFRS)
Definition
A set of global accounting guidelines, formulated by the International Accounting Standards Board (IASB).
Term
Monetary Unit Assumption
Definition
The assumption that requires the items on the financial statements to be measured in terms of a monetary unit.
Term
Accounting Equation
Definition
The basic tool of accounting, measuring the resources of the business (what the business owns or has control of) and the claims to those resources (what the business owes to creditors and to the owners). Assets = Liabilities + Equity
Term
Sarbanes-Oxley Act (SOX)
Definition
Requires management to review internal control and take responsibility for the accuracy and completeness of their financial reports.
Term
Assets
Definition
Economic resources that are expected to benefit the business in the future. Something the business owns or has control of.
Term
Contributed Capital
Definition
Owner contributions to a corporation.
Term
Equity
Definition
The owners' claims to the assets of the business.
Term
Expenses
Definition
The costs of selling goods or services.
Term
Revenues
Definition
Amounts earned from delivering goods or services to customers.
Term
Liabilities
Definition
Debts that are owed to creditors.
Term
Common Stock
Definition
Represents the basic ownership of a corporation.
Term
Dividend
Definition
A distribution of a corporation's earnings to stockholders.
Term
Retained Earnings
Definition
Equity earned by profitable operations of a corporation that is not distributed to stockholders.
Term
Net Income
Definition
The result of operations that occurs when total revenues are greater than total expenses.
Term
Net Loss
Definition
The result of operations that occurs when total expenses are greater than total revenues.
Term
Transaction
Definition
An event that affects the financial position of the business and can be measured with faithful representation.
Term
Accounts Payable
Definition
A short-term liability that will be paid in the future.
Term
Accounts Receivable
Definition
The right to receive cash in the future from customers for goods sold or for services performed.
Term
Financial Statements
Definition
Business documents that are used to communicate information needed to make business decisions.
Term
Income Statement
Definition
Reports the net income or net loss of the business for a specific period.
Term
Statement of Retained Earnings
Definition
Reports how the company's retained earnings balance changed from the beginning to the end of the period.
Term
Balance Sheet
Definition
Reports on the assets, liabilities, and stockholders' equity of the business as of a specific date.
Term
Statement of Cash Flows
Definition
Reports on a business's cash receipts and cash payments for a specific period.
Term
Return on Assets (ROA)
Definition
Measures how profitably a company uses its assets. Net income / Average total assets.
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