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chapter one
accounting: the language of business
28
Accounting
12th Grade
08/23/2011

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Cards

Term
accounting
Definition
financial info about a business/organization- language of business--how it is recorded
Term
accounting system
Definition
gather information about a firms financial affairs, classify the data, and summarize it often. 
Term
financial statements
Definition
periodic reports -owners/managers get a lot of info from these
Term
public accountants
Definition

work for public accounting firms

-do accounting for other businesses- 

3 services: auditing, tax accounting, & management advisory services

Term
certified public accountants [cpa]
Definition
certain # of college credit in accounting, good character, pass the Uniform CPA Examination, fulfill experience requirements of the state
Term
auditing
Definition
review of financial statements to look over their fairness & adherence of generally accepted accounting principles
Term
tax accounting
Definition
tax compliance[preparation of tax returns and the audit of those returns] and tax planning[giving advice to clients on how to structure their financial affairs in order to reduce tax liability]
Term
management advisory services
Definition
helps clients improve their information systems or business performance
Term
managerial accounting
Definition

aka private accounting- works for only ONE business

-helps you understand financial statements

-establish accounting policies

-prepare taxes

-prepare internal reports for CEO

Term
governmental accounting
Definition

work under form of government [state, federal or local]-prepare financial reports and keep financial records

-SEC, IRS, FBI, Homeland Security

Term
accounting clerk
Definition
one to two accounting courses and little to no experience
Term
bookeeper
Definition
one to two years of accounting education and accounting clerk experience
Term
accountant
Definition
bachelor's degree usually or 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
suppliers
Definition

-assess the firm's ability to pay its bills

-set a credit limit for the firm[how much you can charge]

Term
tax authorities
Definition
to determine tax base for: income, sales and property taxes
Term
regulatory agencies and investors
Definition

SEC is the federal agency that oversees the financial info of public corps.

public corps-stock is traded in stock exchanges and over the counter markets

Term
sarbanes-oxley act
Definition

the act led to a major change in the regulatory environment

designed to crack down on corporate fraud and corruption

Term
customers
Definition

use financial info to determine economic health of your business

-determine likelihood that firm will remain in business

Term
employees and unions
Definition
use financial info to negotiate wages and benefits
Term
social entity
Definition
non profit organization
Term
sole proprietorship
Definition
one owner -responsible for debts or taxes
Term
partnership
Definition
two or more owners- all responsible for debts and taxes of the business
Term
corporation
Definition
investors own corporation-publicly or privately owned business-has legal right to do business and own property in its own name-stockholders not responsible for the debts or taxes
Term
stock
Definition
in the form of stock certificates, represents the ownership of the corporation
Term
what is the separate entity assumption?
Definition
personal records separate from business records
Term
GAAP 
Definition

generally accepted accounting principles-rules and regulation that ppl in the accounting profession have to follow-development of GAAP on pg. 14 -FASB board 

 

Term
auditors report
Definition
independent accountant's review of firm's financial statements
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