Unit 3 Section C Flashcards
(34 cards)
Auditing
The process of examining and verifying financial records to ensure their accuracy and compliance with accounting standards. A formal examination of financial statements and practices to ensure compliance with accepted financial standards and laws.
Evaluation
The process of assessing or appraising something’s value or quality. A detailed assessment of something’s performance, effectiveness, or
Financial Statements
Official records that summarize the financial activities of a company, including the income statement, balance sheet, and cash flow statement. Documents that disclose a company’s financial position and performance over a specified period.
Examination
The act of inspecting or scrutinizing something in detail. A systematic inspection or investigation, often used in auditing to review financial records.
Accuracy
The quality of being correct, precise, or free from errors. The degree to which information, especially financial, is exact and correct.
Balance Sheet
A financial statement that provides a snapshot of a company’s financial position, showing assets, liabilities, and shareholders’ equity. A statement outlining the company’s financial position at a particular point in time.
Cash Flow Statement
A financial statement that shows the cash inflows and outflows of a company over a period. A report showing how cash is generated and spent during a specified period, broken into operating, investing, and financing activities.
Equity
The value of ownership interest in a company, calculated as assets minus liabilities. The value of shares or ownership in a company, representing the residual interest after liabilities are paid.
Net Income
The total earnings of a company after all expenses, taxes, and costs are deducted. The final profit or loss of a company after all expenses have been subtracted from total revenues.
External Audits
Independent audits conducted by outside professionals or organizations to verify the financial statements of a company. Audits conducted by external parties to review and verify the financial integrity of a company.
Internal Audits
Audits conducted by the company’s own employees or internal department to assess financial processes and controls. Internal evaluations performed by a company’s staff to ensure compliance with internal standards and regulations.
Government Audits
Audits conducted by government bodies to verify the financial statements of organizations, often related to tax or regulatory compliance. Audits performed by governmental agencies such as the IRS to ensure compliance with tax laws.
Tax Fraud
The illegal act of intentionally falsifying financial records to avoid paying taxes. Criminal actions involving the misrepresentation of tax-related information to reduce tax liability.
Revenue
The income generated by a company from its business activities, such as sales of goods or services. The total amount of income a company earns from its primary business activities.
Financial Flexibility
The ability of a company to adapt its financial strategy to meet changing circumstances. The capacity to manage finances in a way that allows for adjustments in response to unforeseen financial needs or opportunities.
Liquidity
The ability to convert assets into cash quickly without loss of value. The ease with which a company can meet its short-term financial obligations.
Financial Records
Documents that contain a company’s financial transactions, including receipts, invoices, and accounting ledgers. The complete documentation of a company’s financial activities.
Transparency
The quality of being open, clear, and honest in business practices, especially in financial reporting. The practice of providing clear and accessible information to stakeholders to ensure trust and accountability.
Misstatements
Incorrect or inaccurate information, especially in financial reports. Errors or inaccuracies in financial statements that could mislead stakeholders.
Reliability
The quality of being trustworthy and dependable, especially in providing accurate financial information. The consistency and trustworthiness of financial information or processes.
Accountability
The responsibility of individuals or organizations to explain and justify their actions. The obligation to be answerable for actions or decisions, particularly in business or financial contexts.
Investor Confidence
The trust and belief investors have in a company’s financial health and management. The level of trust that investors place in a company based on its performance and management.
Fraud Detection
The process of identifying fraudulent activities or discrepancies in financial records. Methods used to identify and prevent fraud in financial practices.
Deterrence
The act of discouraging actions, typically through the threat of consequences. Measures used to prevent wrongdoing, such as fraud, by making the consequences clear.