Chapter 15 accounting Flashcards
Accounting
Process of measuring, interpreting, and communicating financial information to support internal and external business decision making.
Accounting cycle
Set of activities involved in converting information and individual transactions into financial statement.
Accounting equation
Formula that states the assets must always equal to the sum of liabilities and owners equity
Accrual accounting
Accounting method that records revenues and expenses when they occur not necessarily when cash actually changes hands.
Asset
Anything of value owned by a company
Balance sheet
Statement of a company’s financial position – what it owns and claims against its assets – at a particular point in time
Budget
Company’s plan for how it will raise and spend money during a given period of time.
Double entry bookkeeping
Process by which accounting transactions are entered; each individual transaction always has an off-setting transaction
Financial accounting standards board (FASB)
Organization responsible for evaluating, setting, or modifying GAAP in the United States
Generally excepted accounting principles (GAAP)
Principles that encompass the conventions, rules, and procedures for determining acceptable accounting practices at a particular time.
Income statement
Financial record of a company’s revenues, expenses, and profits over a period of time.
International accounting standards board (IASB)
Organization established in 1973 to promote worldwide consistency in financial reporting practices
International financial reporting standards (IFRS)
Standards and interpretations adopted by the IASB. 
Liability
Anything owed to creators – the claims of a company’s creditors
Owners equity
Funds contributed by the owners plus profit not distributed to owners in the form of cash dividends.
