Chapter 1 Flashcards
(56 cards)
What is an information & measurement system that identifies, records, & communicates relevant information about a company’s business activities?
ACCOUNTING
What is the accounting or balance sheet equation?
ASSETS = LIABILITIES + EQUITY
Must always balance on both sides of the ‘=’
What are the resources a business owns or controls that are expected to provide current and future benefits to the business?
ASSETS
Who are the individuals hired to review financial reports & information systems?
AUDITORS
Which financial statement lists the types and dollar amounts of assets, liabilities, & equity at a specific date?
BALANCE SHEET
Assets Liabilities
Stockholders’ Equity
Common Stock
Retained Earnings
The part of accounting that involves recording transactions & events, either manually or electronically.
BOOKKEEPING or RECORDKEEPING
The principle that requires a business to be accounted for separately from its owner(s) and from any other entity.
BUSINESS ENTITY ASSUMPTION
What is a corporation’s basic ownership share called?
COMMON STOCK or CAPITAL STOCK
The _____________ ________________ is a set of basic concepts that underlie the preparation and presentation of financial statements for external users. It can serve as a guide for developing future standards & to resolve accounting issues that are not addressed directly in current standards using the definitions, recognition criteria, and measurement concepts for assets, liabilities, revenues & expenses.
CONCEPTUAL FRAMEWORK
The total amount of cash & other assets received from stockholders in exchange for stock.
CONTRIBUTED CAPITAL or PAID-IN CAPITAL
A business that is a separate legal entity under state or federal laws with owners called shareholders or stockholders.
CORPORATION
The notion that the benefit of a disclosure exceeds the cost of that disclosure.
COST-BENEFIT CONSTRAINT
Accounting principle that prescribes financial statement information be based on actual costs incurred in business transactions.
COST PRINCIPLE
A corporation’s distributions of assets to its owners.
DIVIDENDS
The Act that:
- promots accountability & transparency in the financial system;
- put an end to the notion of ‘too big to fail’;
- protects taxpayers by ending bailouts; &
- protects consumers from abusive financial services.
DODD-FRANK WALL STREET REFORM & CONSUMER PROTECTION ACT
An owner’s claim on the assets of a business; equals the residual interest in an entity’s assets after deducting liabilities.
EQUITY or NET ASSETS
Codes of conduct by which actions are judged as right or wrong, fair or unfair, honest or dishonest.
ETHICS
Happenings that both affect an organization’s financial position and can be reliably measured.
EVENTS
What is the expanded accounting equation for a non-corporation?
ASSETS = LIABILITIES + [OWNER CAPITAL - OWNER WITHDRAWALS + REVENUES - EXPENSES]
* [equity]
What is the expanded accounting equation for a corporation?
ASSETS = LIABILITIES + [CONTRIBUTED CAPITAL + RETAINED EARNINGS + REVENUES - EXPENSES] for a corporation where dividends are subtracted from retained earnings
* [equity]
Outflows or using up of assets as part of operations of a business to generate sales.
EXPENSES
Prescribes expenses to be reported in the same period as the revenues that were earned as a result of the expenses.
EXPENSE RECOGNITION PRINCIPLE or MATCHING PRINCIPLE
Exchanges of economic value between one entity and another entity.
EXTERNAL TRANSACTIONS
Persons using accounting information who are not directly involved in running the organization.
EXTERNAL USERS
