Business 212 Chapter 1 – Flashcards
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Accounting
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The information system that measures business activities, processes the information into reports, and communicates the results to decision makers.
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Financial Accounting
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The field of accounting that focuses on providing information for external decision makers.
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Managerial Accounting
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The field of accounting that focuses on providing information for internal decision makers.
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Creditor
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Any person or business to whom a business owes money.
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Certified Public Accountants
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Licensed professional accountants who serve the general public.
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Financial Accounting Standards Board (FASB)
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The private organization that oversees the creation and governance of accounting standards in the US
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Securities and Exchange Commission (SEC)
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US government agency that oversees the US financial markets
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Generally Accepted Accounting Principles (GAAP)
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Accounting guidelines, currently formulated by the financial accounting standards board (FASB); the main US accounting rule book.
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Economic Entity Assumption
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an organization that stands apart as a separate economic unti
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Sole Proprietorship
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a business with a single owner
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Partnership
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a business with two or more owners and not organized as a corporation
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Corporation
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a business organized under state law that is separate legal entitiy
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Limited-Liability Company (LLC)
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a company in which each member is only liavle for his or her own actions
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Stockholder
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A person who owns stock in a corporation
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Cost Principle
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a principle that states that acquired assets and services should be recorded at their actual cost
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Accounting Equation
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Assets = Liabilities + Equity
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Assets
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Economic resources that are expected to benefit the business in the future. something the business wons or has control of.
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Liabilities
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Debts that are owed to creditors
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Equity
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the owners' claims to the assets of the business
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Contributed capital
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owner contributors to a corporation
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Revenues
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Amounts earned from delivering goods of services to customers
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Expenses
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The cost of selling goods or services
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Dividend
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A distribution of a corporations earnings to stockholders
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Common Stock
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represents the basic ownership of a corporation
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retained Earnings
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equity earned by profitable operations of a corporation that is not distributed to stockholders
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Accounts Payable
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a short-term liability that will be paid in the future
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Accounts Receivable
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the right to receive cash in the future from customers for goods sold or for services performed
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Income statements
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reports the net income or net loss of the business for a specific period
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Statement of Retained earnings
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Reports how the company's retained earnings balance changed from the beginning to the end of the period.
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Balance Sheet
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Reports on the assets, liabilities, and stockholders equity of the business as of a specific date
