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Chapter 1
Accounting: The Language of Business
28
Accounting
11th Grade
08/23/2011

Additional Accounting Flashcards

 


 

Cards

Term
Accounting
Definition
process by which financial information about a business is recorded, classified, summarized, interpreted, and communicated to owners, managers, and other interested parties.
Term
Accounting System
Definition
accumulates data about a firm's financial affairs, classifies the data in a meaningful way, and summarizes it in periodic reports.
Term
Financial Statements
Definition
periodic reports
Term
Public accountants
Definition
work for public accounting firms
Term
Auditing
Definition
The review of financial statements to assess their fairness and adherence to generally accepted accounting principles
Term
Management Advisor Services
Definition
Involve helping clients improve their information systems or their business performance
Term
Managerial Accounting (Private Accounting)
Definition

working for a single business in industry - perform wide range of activities

establish accounting policies

providing financial advices to managment

manage the accounting system

prepare and interpret financial statements

prepare tax forms and do tax planning

prepare internal reports for management

Term
Governmental Accounting
Definition

Involves keeping financial records and preparing financial reports as part of the staff, or local governmental units

- Security and exchange commission (SEC)

- Internal Revenue Service (IRS)

- Federal Bureau of Investigation (FBI)

- Homeland Security

 

 

 

 

Term
Accounting Clerk
Definition
One or two accounting courses and little to no experience
Term
Bookkeeper
Definition
One to two years of accounting education and accounting clerk experience
Term
Accountant
Definition
Bachelor's degree usually or possibly a two year college degree
Term
Tax Accounting
Definition
Tax compliance (preparation of tax returns and auditing those returns) - tax planning (giving advice to clients to reduce their tax liability) (Tax write-offs)
Term
CPA
Definition
independent accountant who provides accounting services to the public for a fee
Term
Suppliers use financial information to:
Definition

- assess the firm's ability to pay its bills

- set credit limit for the firm


Term
Banks use financial information to:
Definition

- decide whether to make a loan

- determine the terms of the loan


Term
tax authorities use financial info to determine the tax base for:
Definition

- income taxes

- sales taxes

- property taxes

Term
Regulatory Agencies and Investors
Definition

- the securities and exchange commission (SEC) is the federal agency that oversees the financial information of public corporations

- public corporations are those whose stock is traded on stock exchanges and over the counter markets

Term
Surbanes-Oxley Act
Definition

- led to major change in the regulatory environment

- act was purposed to crackdown on corporate fraud and corruption

Term
Customers use financial info to:
Definition

- economic health of business

- if the business is permanent or will stick around for maintenance or parts

Term
employees and unions use financial information to: 
Definition

- negotiate wages and benefits


Term
three major legal forms of business entity:
Definition

- Sole proprietorship

- partnership

- corporation 

Term
Sole Proprietorship
Definition

- business which is owned by one person who is legally responsible for debts and taxes

- will end when owner dies, can't pay, or closes

Term
Partnership
Definition

- owned by two or more people  that are legally responsible for debts/taxes of business               -ends when one or both partners leave

 

 

 

 

 

 

Term
Corporation
Definition

- publicly or privately owned business entity separate from owners - legal right to own property and do business in its own name; stockholders not responsible for debt

- only ends if corp. becomes bankrupt

- thousands own

- stockholders vote to liquidate

Term
Stock
Definition

issued in form of certificates - represent ownership of business

- wanted to buy low, sell high

Term
Separate entity assumption
Definition
keep personal records separated from business records
Term
generally accepted accounting principles (GAAP)
Definition
rules and regulations set up by professional accountants meant for everyone else
Term
auditor's report
Definition
independent accountant's review of a firm's statements
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