Chapter 11 Flashcards
(20 cards)
What is bookkeeping
Recording accounting transactions
What is accounting
A comprehensive system for collecting, analyzing and communicating financial information
What is an accounting information system(AIS)
An organized procedure for identifying, measuring, recording and retaining financial information
Users of accounting information
- business managers
- employees and unions
- investors and creditors
- taxing authorities
- government regulatory
What is a controller
Head of AIS, ensures that the accounting system provides the reports and statements needed
What is financial accounting
Keeps external parties informed about the firms financial condition and follows GAAP requirement
Managerial accounting
Directed at internal parties (managers)
Professional accountants
1) chartered accountants
2) certified general accountants
3) certified management accountants
Accounting services
1) Auditing
2) Tax Services
3) Management Consulting Services
Auditing
Examination of financial records to ensure fair representation
Tax Services
Tax return preparation and tax planning
Management consulting services
Personal financing planning to business planning
International accounting
- international accounting standards board
- members in over 80 countries
- goal is to eliminate differences in financial reporting from country to country
Accounting equation
Assists = liabilities + owners equity
Financial statement
Reflect the activity and financial condition of a company
-balance sheets, income statements and statements of cash flow
Balance sheets
Provide detailed information about the accounting equation factors and financial condition at one point in time
Income statements
Profit and lost statement
Statements of cash flow
A cash basis repot on 3 types of financial activities
1) operating
2) investing
3) financial
Assets
- current assets
- fixed assets
- intangible assets
- goodwill
Ratios
1) solvency rations - short & long term estimate of risk
2) profitability ratios - measures potential earnings
3) activity ratios - reflect management use of assets
