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Basic Accounting
| Question | Answer |
|---|---|
| Something we physically own in order to make money in a business. ex: money, building, fixtures, inventory. | Asset |
| Something we are financially responsible for | Liability |
| Money Put Towards a buisiness whether it be personal or invested | Equity |
| Separate Legal Business Entity, Independent from other businesses | Corporation |
| Examine financial statements to assure they are lawful and accurate | Auditors |
| Separate legal entity in which shares are sold to the public and actively traded in the market | Public Corporation |
| Security Exchange Commission. | SEC |
| Separate legal entity. Illegal to sell shares to the public. Usually very few stockholders and trading. | Private Corporation |
| Not a separate legal entity: ran by one person. Little legal setup, life parallels that of the owner and there is no protection of personal assets. | Proprietorship |
| Not legally separate from the owners. Capital raised by individual partners. Members bound to eachother by position. | Partnership |
| Like a partnership structurally, but with the protection of assets. | Limited Liability Corporation (LLC) |
| Maximize shareholder wealth. Therefore, the managers have a moral and social responsibility to achieve the goals of the shareholders. | Goal of For Profit Entities |
| Recording, classifying, and summarizing of economic events for the purpose of providing financial information used in decision making. Basis for financial analysis. | Accounting |
| Managing an organization'f funds to ensure they are being properly used to achieve the objectives. Does actual financial analysis. | Finance |
| Handles money, responsible for cash flow and the issuing of stocks and bonds. | Treasurer |
| Controls budgets and financial/managerial reporting. | Controller |
| USGAAP | United States Generally Accepted Accounting Principles |
| IFRS | International Financial Reporting Standards |
| Report financial results to a company in a comparable ways using the USGAAP and IFRS in order to provide clear and fair presentations. Enables year to year comparison and comparison to other firms. | Role of Financial Accounting |
| Provides information on entity as a whole, often for external parties. Follows the GAAP and IFRS | Financial Accounting |
| Provides information for internal management at either a product or division level including budgets, salaries, price determination, etc. | Managerial Accounting |
| Increase in a person's overall wealth over time. | Economic Income |
| Profit from specific transactions that are recorded on financial statements. | Accounting Income |
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