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1. Business

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an organization in which basic resources (inputs), such as materials and labor, are assembled and processed to provide goods and or services (outputs) to customers. a. The objective = To earn profit

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2. Profit

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the difference between the amounts received from customers for goods or services and the amounts paid for the inputs used to provide the goods and services.

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3. Service Businesses

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Sells time/provides services rather than products to customers, Example: Education

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4. Merchandising Businesses

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Sells products/ sells products they purchase from other businesses to customers, Example: Retail Business that sells inventory

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5. Manufacturing Businesses

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change basic inputs products that are sold to customers / produces products from raw material & sells it to merchandising businesses

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6. Role of Accounting in Business

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To provide information for managers to use in operating the business

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7. Accounting

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an information system that provides reports to users about the economic activities and condition of a business

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8. Managerial /Management Accounting

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Internal users of accounting information include managers and employees/ internal information/ private accounting

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9. Financial Accounting

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External users of accounting information include investors, creditors, customers, and the government. / External Information /Traded in the stalk market, Example: CPO/CPA

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10. General -Purpose Financial Statements

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one type of financial accounting report that is distributed to external users

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11. Private Accounting

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where managerial accountants employed by a business are employed

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12. Sarbanes-Oxley Act/ SOX

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enacted to prevent fraud in 2002, after 911, a world con, has to do with publicly traded companies (stock) & privately held companies that have more than 500 employees, / U.S. not Global, Example: 20 employees + public traded = have to comply with SOX

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13. Ethics

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moral principles that guide the conduct of individuals

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14. Public Accounting

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Accountants employed individually or within a public accounting firm in tax or audit services/Financial Accounting/External, Example: CPA

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15. Private Accounting

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Accountants employed by companies, government, and non-profit entities/Management Accounting/Internal

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16. CPA = Certified Public Accountants

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who have met the states education, experience, and examination requirements

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17.Generally Accepted Accounting Principles (GAAP)

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Universal languages that you have to comply with in the U.S. and out of the U.S./ Global publicly traded companies, Example: assets that are owned; table, but a bank loan is a liability

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18. Financial Accounting Standards Board / FASB

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has the primary responsibility for developing accounting principles / Just in the U.S.

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19. Securities and Exchange Commission/ SEC

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and agency of the U.S. government, has authority over the accounting and financial disclosures for companies whose shares of ownership (stock) are traded and sold to the public/ Just in the U.S.

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20. International Accounting Standards Board/ IASB

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Not in the U.S.

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21. Business Entity Concept

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The business is viewed as an entity separate from its owners, creditors, or other businesses, kind of like looking through the lens of the business to the outside world/ The business is its own person Example: You put money into a company and they owe you this money back

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22. Cost Concept

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amounts are initially recorded in the accounting records at their cost or purchase price / exchange price / transactional value / it is the negotiation in between a sale

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23. Objective Concept

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requires that the amounts recorded in the accounting records be based on objective evidence.

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24. Unit of Measure Concept

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requires that economic data be recorded in dollars.

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25. The Accounting Equation

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- Assets = Liabilities + Owner's Equity - Assets - Liabilities = Owner's Equity

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26. Asset

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a. Child: i. Cash ii. Accounts Receivable = When we have sold something on an account, and we are receiving the money/ the money others owe your business

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27. Liability

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what we owe others / external a. Child: i. Accounts Payable/ Creditors on Accounts = if you spend money on an account / if you spend money on an account/ when we owe it

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28. Owners Equity

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what the business owes to the owners / internal a. Child: i. Capital =when the owner puts money in ii. -Drawing = when the owner takes money out

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29. Expenses

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what we used, Example: Phone bill, advertising a. Child: i. Cost of Goods Sold = goes up when ever you sell something/ an expense

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30. Income

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what we sold/ revenue/fees earned/sales a. Child: i. Revenue = Income from sale/Delivery Service Fees

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31. Financial Statements =

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I,E,B,C 1. I - Income Statement 2. E - Statement of Owners Equity 3. B - Balance Sheet 4. C - Statement of Cash Flows

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32. I - Income Statement

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also know as the profit an loss account, it then flows into Statement of Owners Equity) has in it.... Defined: reports the revenues and expenses for a period of time, based on the i. Matching Concept (= it is based off of income and expenses) ii. - Income /Fees Earned is what we have sold..... iii. You have to write it out from highest to lowest iv. Net Income/Net Profit = Profit b. Income c. Expenses

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33. E - Statement of Owners Equity

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reports the changes in the owner's equity for a period of time a. Owners Equity

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34. B - Balance Sheet

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reports assets, liability, and owners equity a. The assets are organized by ... b. Liquidity = c. Immediacy = d. Liabilities are organized by immediacy

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35. C - Statement of Cash Flows

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(Deals with Cash, it breaks down between three letters... (Oranges In Florida) i. Cash Receipts = O b. O - Operating Activities (of the business) = the core purpose of the business, when there is an inflow, and outflow c. I - Investing (of the business)= outflow of cash when they buy investments, and outflow when they sell investments d. F - Financing (of the business) = Inflow of cash when you borrow money from the bank, and outflow of money when you pay the bank back

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