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ACCOUNTING
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ACCOUNTING EQUATION
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AcctCh1
Dual-Credit Accounting Chapter 1
| Term | Definition |
|---|---|
| ACCOUNTING | AN INFORMATION AND MEASUREMENT SYSTEM THAT IDENTIFIES, RECORDS, AND COMMUNICATES RELEVANT INFORMATION ABOUT A COMPANY'S BUSINESS ACTIVITIES. |
| ACCOUNTING EQUATION | THE EQUALITY WHERE ASSETS = LIABILITIES + OWNER'S EQUITY |
| ASSETS | RESOURCES THAT A COMPANY OWNS OR CONTROLS THAT ARE EXPECTED TO YIELD FUTURE BENEFITS. |
| AUDIT | AN ANALYSIS AND REPORT OF AN ORGANIZATION'S ACCOUNTING SYSTEMS AND RECORDS USING VARIOUS TEST. |
| BALANCE SHEET | A FINANCIAL STATEMENT THAT LISTS THE TYPES AND DOLLAR AMOUNTS OF ASSETS, LIABILITIES, AND EQUITY AS OF A SPECIFIC DATE; ALSO CALLED THE STATEMENT OF FINANCIAL POSITION. |
| BOOKKEEPING | A PART OF ACCOUNTING THAT INVOLVES RECORDING TRANSACTIONS AND EVENTS, EITHER ELECTRONICALLY OR MANUALLY (ALSO CALLED RECORD KEEPING). |
| BUSINESS ENTITY PRINCIPLE | THE ASSUMPTION THAT REQUIRES A BUSINESS BE ACCOUNTED FOR SEPARATELY FROM ITS OWNER(S). |
| COMMON STOCK | THE NAME GIVEN TO STOCK WHEN A CORPORATION ONLY ISSUES ONE CLASS. |
| CONCEPTUAL FRAMEWORK | A FRAMEWORK FOR SETTING ACCOUNTING STANDARDS THAT BROADLY CONSISTS OF OBJECTIVES, QUALITATIVE CHARACTERISTICS, ELEMENTS, RECOGNITION CRITERIA AND MEASUREMENTS. |
| CORPORATION | A BUSINESS THAT IS SEPARATE LEGAL ENTITY UNDER STATE OR FEDERAL LAWS WITH OWNERS THAT ARE CALLED SHAREHOLDERS OR STOCKHOLDERS. |
| COST PRINCIPLE | THE ACCOUNTING PRINCIPLE, ALSO CALLED THE MEASUREMENT PRINCIPLE THAT REQUIRES FINANCIAL STATEMENT INFORMATION TO BE BASED ON ACTUAL COSTS INCURRED IN BUSINESS TRANSACTIONS. |
| EQUITY | THE OWNER'S CLAIMS ON AN ORGANIZATION'S ASSETS. |
| ETHICS | CODES OR CONDUCT BY WHICH ACTIONS ARE JUDGED AS RIGHT OR WRONG, FAIR OR UNFAIR, HONEST OR DISHONEST. |
| EVENTS | HAPPENINGS THAT BOTH AFFECT AN ORGANIZATION'S FINANCIAL POSITION AND CAN BE RELIABLY MEASURED. |
| EXPANDED ACCOUNTING EQUATION | ASSETS = LIABILITIES + EQUITY WHERE EQUITY EQUALS (OWNER CAPITAL - OWNER WITHDRAWALS + REVENUES - EXPENSES). |
| EXPENSES | THE COSTS NECESSARY TO EARN REVENUES THAT RESULTS IN DECREASE IN EQUITY. |
| EXPENSE RECOGNITION PRINCIPLE | A PRINCIPLE THAT REQUIRES A COMPANY RECORDS EXPENSES INCURRED TO GENERATE REVENUES IT REPORTED. |
| EXTERNAL TRANSACTIONS | EXCHANGES OF ECONOMIC CONSIDERATION BETWEEN ONE ENTITY AND ANOTHER. |
| EXTERNAL USERS | PERSONS USING ACCOUNTING INFORMATION WHO ARE NOT DIRECTLY INVOLVED IN RUNNING THE ORGANIZATION. |
| FINANCIAL ACCOUNTING | AREA OF ACCOUNTING AIMED MAINLY AT SERVING EXTERNAL USERS. |
| FINANCIAL ACCOUNTING STANDARDS BOARD (FASB) | AN INDEPENDENT GROUP OF SEVEN FULL-TIME MEMBERS WHO ARE CURRENTLY RESPONSIBLE OR SETTING ACCOUNTING RULES. |
| FULL DISCLOSURE PRINCIPLE | THE ACCOUNTING PRINCIPLE THAT REQUIRES A COMPANY TO REPORT THE DETAILS BEHIND FINANCIAL STATEMENTS THAT WOULD IMPACT A USERS' DECISIONS. |
| GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) | RULES THAT SPECIFY ACCEPTABLE AUDITING PRACTICES. |
| GOING-CONCERN PRINCIPLE | THE ASSUMPTION THAT REQUIRES FINANCIAL STATEMENTS TO REFLECT THE ASSUMPTION THAT THE BUSINESS WILL CONTINUE OPERATING; ALSO CALLED THE CONTINUING CONCERN PRINCIPLE. |
| INCOME | THE AMOUNT A BUSINESS EARNS AFTER SUBTRACTING ALL EXPENSES NECESSARY FOR ITS SALES (ALSO CALLED PROFIT). |
| INCOME STATEMENT | THE FINANCIAL STATEMENT THAT SUBTRACTS EXPENSES FROM REVENUES TO YIELD A NET INCOME OR LOSS OVER SPECIFIED PERIOD OF TIME. |
| INTERNAL USERS | PERSONS USING ACCOUNTING INFORMATION WHO ARE DIRECTLY INVOLVED IN MANAGING AND OPERATION OF AN ORGANIZATION; EXAMPLES INCLUDE MANAGERS AND OFFICERS. |
| INTERNATIONAL ACCOUNTING STANDARDS BOARD (IASB) | A BOARD THAT IDENTIFIES PREFERRED ACCOUNTING PRACTICES AND ENCOURAGING THEIR WORLDWIDE ACCEPTANCE. |
| INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) | PREFERRED ACCOUNTING PRACTICES ISSUED BY AN INDEPENDENT GROUP (IASB) FROM MANY COUNTRIES. |
| LIABILITIES | CREDITOR'S CLAIMS ON AN ORGANIZATION'S ASSETS. |
| MANAGERIAL ACCOUNTING | THE AREA OF ACCOUNTING AIMED AT SERVING THE DECISION-MAKING NEEDS OF INTERNAL USERS. |
| MATCHING PRINCIPLE | ANOTHER NAME FOR EXPENSE PRINCIPLE. |
| MONETARY UNIT PRINCIPLE | AN ASSUMPTION THAT TRANSACTIONS AND EVENTS CAN BE EXPRESSED IN MONEY UNITS. |
| NET INCOME | AMOUNT EARNED AFTER SUBTRACTING ALL EXPENSES NECESSARY FOR AND MATCHED WITH SALES FOR A PERIOD; ALSO CALLED INCOME, PROFIT, OR EARNINGS. |
| NET LOSS | ARISES WHEN EXPENSES ARE MORE THAN SALES. |
| OWNER INVESTMENT | ASSETS PUT INTO THE BUSINESS BY THE OWNER. |
| OWNER WITHDRAWAL | A PAYMENT OF CASH OR OTHER ASSETS FROM A PROPRIETORSHIP OR PARTNERSHIP TO ITS OWNER OR OWNERS. |
| PARTNERSHIP | A BUSINESS OWNER BY TWO OR MORE PEOPLE THAT IS NOT ORGANIZED AS A CORPORATION. |
| PROPRIETORSHIP | A BUSINESS OWNED BY ONE INDIVIDUAL THAT IS NOT ORGANIZED AS A CORPORATION (ALSO CALLED A PROPRIETORSHIP). |
| RECORD KEEPING | THE RECORDING OF FINANCIAL TRANSACTIONS AND EVENTS, EITHER MANUALLY OR ELECTRONICALLY (ALSO CALLED BOOK KEEPING). |
| RETURN | THE INCOME FROM INVESTMENT. |
| RETURN ON ASSETS | A RATIO SERVING AS AN INDICATOR OR OPERATING EFFICIENCY; DEFINED AS NET INCOME DIVIDED BY AVERAGE TOTAL ASSETS. |
| REVENUES | THE AMOUNTS EARNED FROM SALES OF PRODUCTS OR SERVICES TO CUSTOMERS. |
| REVENUE RECOGNITION PRINCIPLE | ACCOUNTING PRINCIPLE THAT PROVIDES GUIDANCE AS TO WHEN REVENUE MUST BE RECOGNIZED. |
| RISK | THE AMOUNT OF UNCERTAINTY ABOUT AN EXPECTED RETURN. |
| SARBANES-OXLEY ACT | PASSED BY CONGRESS TO HELP CURB FINANCIAL ABUSES AS COMPANIES THAT ISSUE THEIR STOCK TO THE PUBLIC. |
| SECURITY AND EXCHANGE COMMISSION (SEC) | THE FEDERAL AGENCY CREATED BY CONGRESS IN 1934 TO REGULATE SECURITIES MARKETS, INCLUDING THE FLOW OF INFORMATION FROM COMPANIES TO THE PUBLIC. |
| SHAREHOLDERS | THE OWNERS OF A CORPORATION (ALSO CALLED STOCKHOLDERS). |
| SHARES | OWNERSHIP IN A CORPORATION DIVIDED INTO UNITS. |
| SOLE PROPRIETORSHIP | A BUSINESS OWNED BY ONE INDIVIDUAL THAT IS NOT ORGANIZED AS A CORPORATION (ALSO CALLED A PROPRIETORSHIP). |
| STATEMENT OF CASH FLOWS | A FINANCIAL STATEMENT THAT LISTS CASH INFLOWS (RECEIPTS) AND CASH OUTFLOWS (PAYMENTS) DURING A PERIOD; ARRANGED BY OPERATING, INVESTING, AND FINANCING ACTIVITIES. |
| STATEMENT OF OWNER'S EQUITY | A REPORT OF CHANGES IN EQUITY OVER A PERIOD OF TIME; ADJUSTED FOR INCREASES (OWNER INVESTMENT AND NET INCOME) AND FOR DECREASES (WITHDRAWALS AND NET LOSS). |
| STOCK | OWNERSHIP OF A CORPORATION DIVIDED INTO UNITS. |
| STOCKHOLDERS | THE OWNERS OF A CORPORATION (ALSO CALLED SHAREHOLDERS). |
| TIME PERIOD ASSUMPTION | THE ACCOUNTING ASSUMPTION THAT PRESUMES THAT THE LIFE OF A COMPANY CAN BE DIVIDED INTO TIME PERIODS, SUCH AS MONTHS AND YEARS, AND THAT USEFUL REPORTS CAN BE PREPARED FOR THOSE PERIODS. |
| WITHDRAWALS | ASSETS AN OWNER TAKES FROM THE COMPANY FOR PERSONAL USE. |
| INTERNAL TRANSACTIONS | EXCHANGES WITHIN AN ORGANIZATION THAT CAN ALSO AFFECT THE ACCOUNTING EQUATION. |
Created by:
DarciEven
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