Term
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Definition
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Term
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Definition
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-Idenitfy the event or transaction
-Record event or transaction
-Create a report to summarize info
-Analyze and Interpret report
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Term
| Gaap
(general accepted accounting principles) |
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Definition
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Consists of:
-FASB- creates accounting rules
-SEC- enforces accounting rules
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Term
| Forms of Business Organizations
(type of entity) |
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Definition
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1) sole proprietorship- one owner
2) partnership- two or more owners
_Corporation- Legally separated from
owners with limited
liability
(owner not held liable for corporation)
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Term
| Building Blocks of Accounting
(6 types of accounts) |
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Definition
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A- Assets-something you own
L- Liability- something you owe
SE- Stockholder's Equity- Common Stock, Retained Earnings
R- Revenue- increase in equity
E- Expense- decrease in equity
D- Dividend- distribution to stockholders (choice not an obligation)
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Term
| FIRST- Basic Financial Statement
Income Statement |
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Definition
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Reports entity profit for a specific time
- R(revenue)-E(expenses)= NI (net income)
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Term
| SECOND- Basic Financial Statement
Statement of Retained Earnings |
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Definition
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Report entity retained earnings for a specific period of time
-BRE(beginning retained earnings) + NI (net income) - D (dividends)= ERE (end retained earnings)
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Term
| THIRD- Basic Financial Statement
Balance Sheet |
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Definition
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Report position of equity at a specific period of time
ALWAYS HAS TO BALANCE
A(assets)=L(liability)+ SE (stockholder's equity
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Term
| FOURTH- Basic Financial Statement
Statement of Cash Flow |
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Definition
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Reports various sources of cash during s specific point of time
-Classifies cash inflows and outflows
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