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Nature of Accounting
Objective 4.01 Part 2
| Term | Definition |
|---|---|
| Accountant | An individual who has had specialized training in accounting procedures |
| Accounting | the process of keeping financial records |
| Accounting cycle | A process or series of steps that businesses complete to maintain their financial records effectively |
| Accounting Standards | Rules that accountants must follow when preparing financial statements |
| Accounting system | The methods and procedures used in consistently handling the business's financial records |
| Acquisition of funds | finance activity involving making decisions about financing |
| Administration of assets | finance activity involving making decisions about a firm's investments |
| Accrual accounting method | A method of accounting that records transactions at the time they occur even if no money changes hands at the time |
| Assets | Anything of value that a business owns |
| Balance Sheet | A financial statement that captures the financial condition of the business at that particular time |
| Bookkeeping | The steps of the accounting cycle that involve recording each business transaction; the process of analyzing financial transactions, journalizing transactions, posting to ledgers, and balancing the books |
| Cash | currency and coins |
| Cash Accounting method | An accounting method in which income and expenditures are recorded at the time the money changes hands |
| Cash flow statement | A financial summary with estimates as to when, where and how much money will flow into and out of a business |
| Capital investment decisions | Decisions that determine which projects a business will invest in, how the investment (s) will be financed, and whether to pay dividends to shareholders |
| Credit | The arrangement by which businesses or individuals can purchase now and pay later |
| Expenditures | The monies that a business spends; also called expenses |
| Expenses | the monies that a business spends; also called expenditures |
| Finance | In business, the function that involves all money and money management matters |
| Financial accounting | A type of accounting that involves preparing and reporting financial data to external users who are not directly in business operations |
| Financial statement | a summary of accounting information |
| Income | Money received by a business or an individual from outside sources |
| Income statement | A financial summary that shows how much money the business has made or has lost; also called the profit-and-loss statement |
| Investors | Those who invest their funds in a business; may be owners or stockholders |
| Journal | A special book or computer program in which a business's transactions are recorded in the order in which they occur |
| Ledger | The accounting record for a specific department or area of the business |
| Liabilities | debts that the business owes |
| Managerial accounting | A type of accounting that involves preparing and reporting financial data to internal users, usually managers, who need who need financial information to control day-to-day operations and to make financial decisions and plans affecting the business |
| Net worth | The total value of the business |
| Owner's Equity | The amount an owner has invested in the business plus or minus profits and losses |
| Transaction | A business activity such as a sale, a purchase, or a return |
| Trial balance | the listing of a business's different accounts and their current balances; used to check the accuracy of a journal and ledger entries |
Created by:
jayda.Z519
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