4.01 Key Terms Flashcards
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
acquisition of funds
Finance activity involving making decisions about financing
administration of assets
Finance activity involving making decisions about a firm’s investments
assets
Anything of value that a business owns
balance sheet
A financial statement that captures the financial condition of the business at that particular moment
capital investment decision
Decisions that determine which projects a business will invest in, how the investment(s) will be financed, and whether to pay dividends to shareholders
cash flow statement
A financial summary with estimates as to when, where, and how much money will flow into and out of a business
dividends
A sum of money paid to an investor or stockholder as earnings on an investment
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 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
liabilities
Debts that the business owes
net worth
The total value of the business
owners equity
The amount an owner has invested in the business plus or minus profits and losses
