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Financial Accounting 7th ed Chapter 01 Glossary
for UoP XACC 291
41
Accounting
Undergraduate 1
02/03/2014

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Term
accounting
Definition
the information system that identifies, records, and communicates the economic events of an organization to interested users.  (p. 4)
Term
assets
Definition
resources a business own. (p. 12)
Term
balance sheet
Definition
a financial statement that reports the assets, liabilities, and owner's equity at a specific date. (p. 21)
Term
basic accounting equation
Definition
Asset = Liabilities + Stockholders' Equity. (p. 12)
Term
bookkeeping
Definition
a part of accounting that involves only the recording of economic events. (p. 5)
Term
common stock
Definition
term used to describe the total amount paid in by stockholders for the shares they purchase. (p. 13)
Term
corporation
Definition
a business organized as a separate legal entity under state corporation law, having ownership divided into transferable shares of stock. (p. 10)
Term
cost principle
Definition
an accounting principle that states that companies should record assets at their cost. (p. 9)
Term
dividend
Definition
a distribution by a corporation to its stockholders on a pro rata (equal) basis. (p. 13)
Term
economic entity assumption
Definition
`an assumption that requires that the activities of the entity be kept separate and distinct from the activities of its owner and all other economic entities. (p. 10)
Term
ethics
Definition
the standards of conduct by which one's actions are judged as right or wrong, honest or dishonest, fair or not fair. (p. 8)
Term
expenses
Definition
the cost of assets consumed or services used in the process of earning revenue. (p. 13)
Term
fair value principle
Definition
an accounting principle that states that companies should record assets at their fair value. (p. 9)
Term
faithful representation
Definition
it means that the numbers and descriptions of financial information match what really existed or happened - it is factual (p. 9)
Term
financial accounting
Definition
the field of accounting that provides economic and financial information for investors, creditors, and other external users. (p. 6)
Term
Financial Accounting Standards Board (FASB)
Definition
a private organization that establishes generally accepted accounting principles (GAAP). (p. 9)
Term
generally accepted accounting principles (GAAP)
Definition
common standards that indicate how to report economic events. (p 8)
Term
income statement
Definition
a financial statement that presents the revenues and expenses and resulting net income or net loss of a company for a specific period of time. (p. 21)
Term
International Accounting Standards Board (IASB)
Definition
an accounting standard-setting body that issues standards adopted by many countries outside of the United States. (p 9)
Term
liabilities
Definition
creditor claims on total assets. (p. 12)
Term
managerial accounting
Definition
the field of accounting that provides internal reports to help users make decisions about their companies. (p. 6)
Term
monetary unit assumption
Definition
an assumption stating that companies include in the accounting records only transaction data that can be expressed in terms of money. (p. 9)
Term
net income
Definition
the amount by which revenues exceed expenses. (p. 23)
Term
net loss
Definition
the amount by which expenses exceed revenues. (p. 23)
Term
partnership
Definition
a business owned by two or more persons associated as partners. (p. 10)
Term
proprietorship
Definition
a business owned by one person. (p. 10)
Term
Public Company Accounting Oversight Board (PCAOB)
Definition
it determines auditing standards and reviews auditing firms. (p. 8)
Term
relevance
Definition
it means that financial information is capable of making a difference in a decision. (p. 9)
Term
retained earnings statement
Definition
a financial statement that summarizes the changes in retained earnings for a specific period of time. (p. 21)
Term
revenues
Definition
the gross increase in stockholders' equity resulting from business activities entered into for the purpose of earning income. (p. 13)
Term
Sarbanes-Oxley Act of 2002 (SOX)
Definition
law passed by Congress in 2002 intended to reduce unethical corporate behavior. (p. 7)
Term
Securities and Exchange Commission (SEC)
Definition
a governmental agency that requires companies to file financial reports in accordance with generally accepted accounting principles. (p. 8)
Term
statement of cash flows
Definition
a financial statement that summarizes information about the cash inflows (receipts) and cash outflows (payments)for a specific period of time. (p. 21)
Term
stockholders' equity
Definition
the ownership claim on a corporation's total assets. (p. 13)
Term
transaction
Definition
the economic events of a business that are recorded by accountants. (p. 14)
Term
auditing
Definition
the examination of financial statements by a certified public accountant in order to express an opinion as to the fairness of presentation. (p. 30)
Term
forensic accounting
Definition
an area of accounting that uses accounting, auditing, and investigative skills to conduct investigations into theft and fraud. (p. 314)
Term
management consulting
Definition
an area of public accounting ranging from development of accounting and computer systems to support services for marketing projects and merger and acquisition activities. (p. 30)
Term
private (or managerial) accounting
Definition
an area of accounting within a company that involves such activities as cost accounting, budgeting, design, and support of accounting information systems, and tax planning and preparation. (p. 30)
Term
public accounting
Definition
an area of accounting in which the accountant offers expert service to the general public. (p. 30)
Term
taxation
Definition
an area of public accounting involving tax advice, tax planning, preparing tax returns, and representing clients before governmental agencies. (p. 30)
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