Financial Accounting
The area of accounting that refers to providing information to support external investment and credit decisions
Management Accounting
The area of accounting that refers to providing information to support internal management decisions
Financial Reporting
A broad term that describes all information provided to external users, including but not limited to financial statements
Financial Statements
Statement of financial position (balance sheet), income statement, statement of cash flows
General-purpose assumption
The fact that the same information is provided to various external users, including investors and creditors
Internal control
procedures and processes within an organization that ensure the integrity of accounting information
Public Accounting
The segment of the accounting profession that relates to providing audit, tax, and consulting services to clients
Bookkeeping
The procedural aspect of accounting that involves keeping detailed records of business transactions, much of which is done by computers.
Institute of Internal Auditors
Internal organization dedicated to the advancement of internal auditing
Securities and Exchange Commission
Government agency responsible for financial reporting by publicly held companies
Institute of management accountants
organization dedicated to providing members personal and professional development opportunities in the area of management accounting
Financial Accounting Standards board
Private-sector organization that establishes accounting standards
American Accounting Association
Organization consisting primarily of accounting educators that encouraged improvements in teaching and research
GAAP
(general accepted accounting principles)- style manual mostly comes from FASB
Accounting Equation
Assets= liabilities+ owners equity
Statement of retained earnings
shows growth in company ( they money you make each year added to previous earnings)
Statement of cash flows
measures cash that comes into business from operations, investors and then leaves the company for same reasons
Assets=
Equity
attest function
have to be independent
periodicity
report for a specific period involved with income statement fiscal year
audit
an inspection of the accounting procedures and records by a trained accountant or CPA
balance sheet
a position statement that shows where the company stands in financial terms at a specific date
Sarbances-Oxley Act
designed to improve the effectiveness of corporate financial reporting through enhanced accountability of auditors
Cost Principle
the widely used principle of accounting for assets at their original cost to the current owner
going-concern assumption
an assumption by accountants that a business will operate in the foreseeable future unless specific evidence suggests that this is not a reasonable assumption
negative cash flows
a payment of cash that reduces the enterprises cash balance
positive cash flows
increases in cash that add to the enterprises cash balance
materiality
at what point do we decide to declare an asset an asset
capitalize
not treated as an asset, treated as an expense
sole proprietorship
unlimited liability ( disadvantage company goes away)
current liabilities- expect to pay in one year
long term assets- buildings and trucks
objectivity
we have evidence for all the transactions in which we engage
dividens are not an
expense