Accounting

The information system that measures business activities, processes the information into reports, and communicates the results to decision makers.

Financial Accounting

The field of accounting that focuses on providing information for external decision makers

Managerial Accouting

The field of accounting that focuses on providing information for internal decision makers

Creditor

Any person or business to whom a business owes money

Certified Public Accountants(CPAs)

Licensed professional accountants who serve the general public

Certified Management accountants(CMAs)

Certified professionals who specialize in accounting and financial management knowledge. They typically work for a single company.

Financial Accounting Standards Board(FASB)

The private organization that oversees the creation and governance of accounting standards in the United States

Securities and Exchange Commission(SEC)

U.S. governmental agency that oversees the U.S. financial markets

General Accepted Accounting Principles(GAAP)

Accounting guidelines, currently formulated by the Financial Accounting standards board; the main U.S. accounting rule book.

Economic Entity Assumption

An organization that stands apart as a separate economic unit

Stockholder

A person who owns stock in a corporation

Sole Proprietorship

A business with a single owner

Partnership

A business with two or more owners and not organized as a corporation

Corporation

a business organized under state law that is a separate legal entity

Limited-Liability Company (LLC)

A company in which each member is only liable for his or her own actions

Cost Principle

A principle that states that acquired assets and services should be recorded at their actual cost.

Going concern assumption

Assumes that the entity will remain in operation for the foreseeable future

Monetary Unit assumption

the assumption that requires the items on the financial statements to be measured in terms of a monetary unit

International Financial Reporting Standards(IFRS)

A set of global accounting guidelines, formulated by the international accounting standards board

International Accounting Standards Board(IASB)

The private organization that oversees the creation and governance of International Financial Reporting Standards

Audit

An examination of a company's financial statements and records

Sarbanes-Oxley Act(SOX)

Requires companies to review internal control and take responsibility for the accuracy and completeness of their financial reports

Assets

Economic resources that are expected to benefit the business in the future. Something the business owns or has control of

Liabilities

Debts that are owed to creditors

Equity

the owner's claim to the assets of the business

Contributed Capital

owners contributions to a corporation

Revenues

amount earned from delivering goods or services to customers

expenses

the cost of selling good or services

Dividend

a distribution of a corporation's earnings to stock holders

common stock

represents the basic ownership of a corporation

retained earnings

capital earned by profitable operations of a corporation that is not distributed to stockholders

net income

the result of operations that occur when total revenues are greater than total expenses

net loss

the result of operations that occur when total expenses are greater than total revenues

Transaction

an event that affects the financial position of the business and can be measured reliably in dollar amounts

Accounts payable

a short-term liability that will be paid in the future

accounts receivable

the right to receive cash in the future from customers for goods sold or for services preformed

Financial Statements

Business documents that are used to communicate information needed to make business decisions

income statement

reports the net income or net loss of the business for a specific period

statement of retained earnings

reports how the company's retained earnings balance changed from the beginning to the end of the period

balance sheet

reports on the assets, liabilities and stockholders' equity of the business as of a specific date

statement of cash flows

Reports on a business' cash receipts and cash payments for a specific period

Return on Assets(ROA)

Measures how profitably a company uses its assets. Net income/average total assets