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R ACCT2301 Terms
Terms used in Accounting I (ACCT2301) at Richland College
| Question | Answer |
|---|---|
| Accounting | A system of maintaining records of a company's operations and communicating that information to decision makers |
| Accounting Equation | Equation that shows a company's resources (assets) equal creditors' and owners' claims to those resources (liabilities and stockholders' equity) |
| Assets | Resources owned by a company |
| Auditors | Trained individuals hired by a company as an independent party to epxress a professional opinion of the accuracy of that company's financial statements |
| Balance Sheet | A financial statement that presents the financial position of the company on a particular date |
| Comparability | The ability of users to see similarities and differences between two different business activities |
| Consistency | The use of similar accounting procedures over time for the same company, or across companies at the same point in time |
| Corporation | An entity that is legally separate from the owners |
| Cost Effectiveness | Financial accounting information is provided only when the benefits of doing so exceed the costs |
| Decision Usefulness | The ability of the information to be useful in decision making |
| Dividends | Cash payments to stockholders |
| Economonic Entity Assumption | All economic events with a particular economic entity can be identified |
| Ethics | A code or moral system that provides criteria for evaluating right and wrong behavior |
| Expenses | Costs of providing products and services |
| Faithful Representation | Accounting information that is complete, neutral, and free from material error |
| Financial Accounting | Measurement of business activities of a company and communication of those measurements to external parties |
| Financial Accounting Standards Board | An independent, private body that has primary responsibility for the establishment of GAAP in the US |
| Financial Statements | Periodic reports published by the company for the purpose of providing information to external users |
| Financing Activities | Transactions involving external sources of funding |
| Generally Accepted Accounting Principles | The rules of financial accounting |
| Going Concern Assumption | In the absence of information to the contrary, a business entity will continue to operate indefinitely |
| Income Statement | A financial statement that reports the company's revenues and expenses over an interval of time |
| International Accounting Standards Board | An international accounting standard-setting body |
| International Financial Reporting Standards | The standards being developed and promoted by the International Accounting Standards Board |
| Investing Activities | Transactions involving the purchase and sale of resources not directly related to a company's normal operations such as land, buildings, equipment, and machinery |
| Liabilities | Amounts owned to creditors |
| Materiality | The impact of financial accounting information on investors' and creditors' decisions |
| Monetary Unit Assumption | A unit or scale of measurement can be used to measure financial statement elements |
| Net Income | Difference between revenues and expenses |
| Operating Activities | Transactions involving the primary operations of the company, such as providing prodices and services, such as utilities, taxes, advertising, wages, rent, and maintenance |
| Partnership | Businesses owned by two or more persons |
| Periodicity Assumptions | The economic life of an enterprise (presumed to be indefinite) can be divided into artificial time periods for financial reporting |
| Relevance | Accounting information that possesses confirmatory value and/or predictive value |
| Retained Earnings | Cumulative amount of net income earned over the life of the company that has not been distributed to stockholders as dividends |
| Revenues | Amounts earned from selling products or services to customers |
| Sarbanes-Oxley Act | Provides regulation of auditors and the types of services they furnish to clients, increases accountability of corporate executives, addresses conflicts of interest for securities analysts, and provides for stiff criminal penalities for violators |
| Sole Proprietorship | A business owned by one person |
| Statement of Cash Flows | A financial statement that measures activities involving cash receipts and cash payments over an interval of time |
| Statement of Stockholders' Equity | A financial statement that summarizes the changes in stockholders' equity over an interval of time |
| Stockholder's Equity | Stockholders', or owners', claims to resources, which equal the difference between total assets and total liabilities |
| Timeliness | Information being available to users early enough to allow them to use it in the decision process |
| Understandability | Users must understand the information within the context of the decision they are making |
| Verifiability | A consensus among different measurers |
Created by:
dhosterman
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