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53 Cards in this Set
- Front
- Back
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Define accounting.
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an information system that measures , processes, and communicates financial information about an identifiable economic entity
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Define profitability.
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the need to earn enough income to attract and hold investment capital
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Define liquidity.
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having enough cash available to pay debts when they are due
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Define financing activities.
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activities undertaken by management to obtain adequate funds to begin and to continue operating a business
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Define investing activities.
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activities undertaken by management to spend capitol in ways that are productive and will help a business achieve its objectives
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Define operating activities.
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activities undertaken by management in the course of running the businesss
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Define performance measures.
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indicators of whether managers are achieving business goals and whether the business activities are well managed.
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Define management accounting.
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provides internal decision makers who are charged with achieving the goals of profitability and liquidity with information about financing, investing, and operating activities.
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Define financial accounting.
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generates reports and communicates them to external decision makers so that they can evaluate how well the business has achieved its goals.
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Define financial statements.
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The primary means of communicating important accounting information to users. They include the income statement, statement of owner's equity, balance sheet, and statement of cash flows.
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Define bookkeeping.
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the process of recording financial transactions and keeping financial records.
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Define computer.
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an electronic tool used to collect, organize, and communicate vast amounts of information with great speed.
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Define management information system (MIS).
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consists of the interconnected subsystems that provide the information needed to run a business.
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Define management.
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refers to the people who have overall responsibility for operating a business and for meeting its profitability and liquidity goals.
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Define business transactions.
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economic events that affect the financial position of a business entity.
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Define money measure.
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the recording of all business transactions in terms of money.
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Define exchange rate.
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the value of one currency in terms of another.
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Define seperate entity.
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a business that is treated as distinct from its creditors, customers, and owners.
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Define sole proprietorship.
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a business owned by one person and is not incorporated.
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Define partnership.
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a business that is owned by two or more people and that is not incorporated.
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Define corporation.
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a business unit chartered by the state and legally seperate from its owners (the stockholders).
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Define financial position.
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refers to the economic resources that belong to a company and the claims against those resources at a point in time.
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Define the accounting equation.
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Assets = liability + owner's equity
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Define assets.
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economic resources owned by a business that are expected to benefit future operations.
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Define liabilities.
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present obligations of a business to pay cash, transfer assets, or provide services to other entities in the future.
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Define owner's equity.
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represents the claims by the owner of a business to the assets of the business. It equals the residual interest, or residual equity, in the assets of an entity after deducting the entity's liabilities.
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Define net assets.
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assets minus liabilities; owner's equity.
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Define owner's investments.
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the assets that the owner puts into the business.
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Define owner's withdrawals.
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the assets that the owner takes out of the business.
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Define revenues.
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increases in owner's equity that result from operating a business.
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Define expenses.
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decreases in owner's equity that result from operating a business.
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Define net income.
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the difference between revenues and expenses when revenues exceed expenses.
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Define net loss.
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the difference between expenses and revenues when expenses exceed revenues.
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Define income statement.
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summarizes the revenues earned and expenses incurred by a business over a period of time.
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Define statement of owner's equity.
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shows the change in the owner's capital over a period of time.
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Define balance sheet.
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shows the financial position of a business on a certian date, usually the end of the month or year.
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Define statement of cash flows.
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the financial statement that shows the inflows and outflows of cash from operating activities, investing activities, and financing activities over a period of time.
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Define cash flows.
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the inflows and outflows of cash into and out of a business.
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Define generally accepted accounting principles (GAAP).
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the conventions, rules, and procedures that define accepted accounting practice at a particular time.
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Define certified public accountants (CPAs).
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public accountants who have met the stringent state licensing requirements.
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Define an audit.
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an examination of a company's financial statements in order to render an independent professional opinion that they have been presented fairly, in all material respects, in conformity with generally accepted accounting principles.
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What is the Financial Accounting Standards Board (FASB).
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the most important body for developing and issuing rules on accounting practice, called Statements of Financial Accounting Standards.
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What is the American Institute of Certified Public Accountants?
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the professional association of certified public accountant.
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What is the Governmental Accounting Standards Board (GASB)?
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the board responsible for issuing accounting standards for state and local governments.
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What is the International Accounting Standards Board (IASB)?
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the organization that encourages worldwide cooperation in the development of accounting principles; it has approved more than 30 international standards of accounting.
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What is the Internal Revenue Service (IRS)?
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the federal agency that interprets and enforces the tax laws governing the assessment and collection of revenue for operating the national government.
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Define ethics.
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a code of conduct that addresses whether everyday actions are right or wrong.
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Define professional ethics.
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a code of conduct that applies to the practice of a profession.
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Define integrity.
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honesty, candidness, and the subordination of personal gain to service and the public trust.
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Define objectivity.
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impartiality and intellectual honesty.
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Define independence.
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the avoidance of all relationships that impair or appear to impair an accountant's objectivity.
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Define due care.
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competence and diligence in carrying out professional responsibilities.
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What is the Institute of Management Accountants (IMA).
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a professional organization made up primarily of management accountants.
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