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ACC-Chapter 1
| Question | Answer |
|---|---|
| Accounting | The information system that identifies, records, and communicates the economic events of an organization to interested users |
| Assets | Resources a business owns |
| Balance Sheet | A financial statement that reports the assets, liabilities, and owner’s equity at a specific date |
| Basic Accounting Equation | Assets=Liabilities + Owner’s Equity |
| Bookkeeping | A part of accounting that involves only the recording of economic events |
| Corporation | A business organized as a separate legal entity under state corporation law, having ownership divided into transferable shares of stock |
| Cost Principle | An accounting principle that states that companies should record assets at their cost |
| Drawings | Withdrawal of cash or other assets from an unincorporated business for the personal use of the owner(s) |
| Economic Entity Assumption | An assumption that requires that the activities of the entity be kept separate and distinct from the activities of its owner and all other economic entities |
| Ethics | The standards of conduct by which one’s actions are judged as right or wrong, honest or dishonest, fair or not fair |
| Expenses | The cost of assets consumed or services used in the process of earning revenue |
| Financial Accounting | The field of accounting that provides economic and financial information for investors, creditors, and other external users |
| Financial Accounting Standards Board (FASB) | A private organization that establishes generally accepted accounting principles |
| Generally Accepted Accounting Principles (GAAP) | Common standards that indicate how to report economic events |
| Income Statement | A financial statement that presents the revenues and expenses and resulting net income or net loss of a company for a specific period of time |
| International Accounting Standards Boards (IASB) | An accounting standard-setting body that issues standards adapted by many countries outside of the United States |
| Investments by Owner | The assets an owner puts into the business |
| Liabilities | Creditors claims on total assets |
| Managerial Accounting | The field of accounting that provides internal reports to help users make decisions about their company |
| Monetary Unit Assumption | An assumption stating that companies include in the accounting records only transaction data that can be expressed in terms of money |
| Net Income | The amount by which revenues exceed expenses |
| Net Loss | The amount by which expenses exceed revenues |
| Owner’s Equity | The ownership claim on total assets |
| Owner’s Equity Statement | A financial statement that summarizes the changes in owner’s equity for a specific period of time |
| Partnership | A business owned by two or more persons associated as partners |
| Proprietorship | A business owned by one person |
| Revenues | The gross increase in owner’s equity resulting from business activities entered into for the purpose of earning income |
| Sarbanes-Oxley Act of 2002 (SOX) | Law passed by Congress in 2002 intended to reduce unethical corporate behavior |
| Securities and Exchange Commission (SEC) | A governmental agency that requires companies to file financial reports in accordance with generally accepted accounting principles |
| Statement of Cash Flows | A financial statement that summarized information about the cash inflows and cash outflows for a specific period of time |
| Transactions | The economic events of a business that are recorded by accountants |
Created by:
JJACCOUNTING
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