Chapter 2.2 Accounting: The Universal Language of Business – Flashcards
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Accounting System
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Designed to collect, document, and report on financial transactions affecting the business.
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Manual Accounting System
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Accounting information is processed by hand.
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Computerized Accounting System
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Known as automated accounting system. When the financial information is recorded by entering it into a computer.
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GAAP
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Generally accepted accounting principles. The Financial Accounting Standards Board (FABS) issues these rules.
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Financial Reports
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Summarized information about the financial status of a business. Accounting is called the "language of business."
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Management Accounting
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Focuses on reporting information to management, and is often referred to as accounting for internal users of accounting information.
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Financial Accounting
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Focuses on reporting information to external users. Financial accounting reports are prepared for individuals not directly involved in the day-to-day operations of the business.
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Three Accounting Assumptions
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-Business Entity -accounting period -going concern
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Business Entity
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It exists independently of it's owner's personal holdings.
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Accounting Period
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Also known as an accounting cycle. A period of time covered by an accounting report.
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Going Concern
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Accountants assume that a business has the ability to survive and operate indefinitely.
