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Ch 1 Intro to Finance Statements
Wiley Plus Acc 2010 UVU
25
Accounting
Undergraduate 3
08/29/2015

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Term
Sole proprietorship
Definition
A business owned by one person.
Term
Partnership
Definition
A business owned by two or more persons associated as partners.
Term
Corporation
Definition
A business organized as a separate legal entity owned by stockholders.
Term
Accounting
Definition
The information system that identifies, records, and communicates the economic events of an organization to interested users.
Term
Sarbanes-Oxley Act (SOX)
Definition
Regulations passed by Congress to reduce unethical corporate behavior.
Term
Liabilities
Definition
Amounts owed to creditors in the form of debts and other obligations.
Term
Common stock
Definition
Term used to describe the total amount paid in by stockholders for the shares they purchase.
Term
Assets
Definition
Resources owned by a business.
Term
Revenue
Definition
The increase in assets or decrease in liabilities resulting from the sale of goods or the performance of services in the normal course of business.
Term
Expenses
Definition
The cost of assets consumed or services used in the process of generating revenues.
Term
Net income
Definition
The amount by which revenues exceed expenses.
Term
Net loss
Definition
The amount by which expenses exceed revenues.
Term
Income statement
Definition
A financial statement that reports a company's revenues and expenses and resulting net income or net loss for a specific period of time.
Term
Retained earnings
Definition
The amount of net income retained in the corporation.
Term
Retained earnings statement
Definition
A financial statement that summarizes the amounts and causes of changes in retained earnings for a specific time period.
Term
Balance sheet
Definition
A financial statement that reports the assets and claims to those assets at a specific point in time.
Term
Stockholders' equity
Definition
The owners' claim to assets.
Term
Basic accounting equation
Definition
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Term
Statement of cash flows
Definition
A financial statement that provides financial information about the cash receipts and cash payments of a business for a specific period of time.
Term
Annual report
Definition
A report prepared by corporate management that presents financial information including financial statements, a management discussion and analysis section, notes, and an independent auditor's report.
Term
Management discussion and analysis (MD&A)
Definition
A section of the annual report that presents management's views on the company's ability to pay near-term obligations, its ability to fund operations and expansion, and its results of operations.
Term
Notes to the financial statements
Definition
Notes clarify information presented in the financial statements and provide additional detail.
Term
Auditor's report
Definition
A report prepared by an independent outside auditor stating the auditor's opinion as to the fairness of the presentation of the financial position and results of operations and their conformance with generally accepted accounting principles.
Term
Certified public accountant (CPA)
Definition
An individual who has met certain criteria and is thus allowed to perform audits of corporations.
Term
Dividends
Definition
Payments of cash from a corporation to its stockholders.
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