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4.01 Nature of Accou
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 of 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 information |
| Acquisition of funds | Finance activity involving making decisions about financing |
| administration of assets | finance activity involving making decisions about a firms 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 conditions of the business at that particular moment |
| bookkeeping | The steps of the accounting cycle that involve recording each business transection; 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 stimulates 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 investments 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 statement | a summary of accounting that involves preparing and reporting financial data to external users who are not directly involved in business operations |
| 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 mangers who need financial information to control day -to - day operations and 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 journal and ledger entries |
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