Chapter 1 – Accounting: The Language of Business – Flashcards
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Accounting
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The process by which financial information about a business is recorded, classified, summarized, interpreted, and communicated to owners, managers, and other interested parties.
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Accounting System
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A process designed to accumulate, classify, and summarize financial data.
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Auditing
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The review of financial statements to assess their fairness and adherence to generally accepted accounting principles.
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Auditor's Report
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An independent accountant's review of a firm's financial statements.
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Certified Public Accountant (CPA)
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An independent accountant who provides accounting services to the public for a fee.
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Corporation
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A publically or privatey owned business entity that is separate from its owners and has a legal right to own property and do business in its own name; stockholders are not responsible for the debts or taxes of the business.
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Creditor
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One to whom money is owed.
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Discussion Memorandum
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An explanation of a topic under consideration by the Financial Accounting Standards Board.
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Economic Entity
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A business or organization whose major purpose is to produce a profit for its owners.
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Entity
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Anything having its own separate identity, such as an individual, a town, a university, or a business.
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Exposure Draft
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A proposed solution to a problem being considered by the Financial Accounting Standards Board.
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Financial Statements
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Periodic reports of a firm's financial position or operating results.
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Generally Accepted Accounting Principles (GAAP)
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Accounting standards developed and applied by professional accountants.
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Governmental Accounting
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Accounting work performed for a federal, state, or local governmental unit.
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International Accounting
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The study of accounting principles used by different countries.
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Management Advisory Services
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Services designed to help clients improve their information systems or their business performance.
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Managerial Accounting
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Accounting work carried on by an accountant employed by a single business in industry; the branch of accounting that provides financial information about business segments, activities, or products.
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Partnership
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A business entity owned by two or more persons who carry on a business for profit and who are legally responsible for the debts and taxes of the business.
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Public Accountants
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Members of firms that perform accounting services for other companies.
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Separate Entity Assumption
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The concept that a business is separate from its owners; the concept of keeping a firm's financial records separate from the owner's personal financial records.
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Social Entity
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A nonprofit organization, such as a city, public school, or public hospital.
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Sole Proprietorship
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A business entity owned by one person who is legally responsible for the debts and taxes of the business.
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Statements of Financial Accounting Standards
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Accounting principles established by the Financial Accounting Standards Board.
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Stock
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Certificates that represent ownership of a corporation.
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Stockholders
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The owners of a corporation; also called shareholders.
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Tax Accounting
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A service that involves tax compliance and tax planning.
