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Financial Accounting
Chapter 1
12
Accounting
Undergraduate 2
05/18/2009

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Term
Accounting
Definition
A system that collects and processes financial information about an organization and reports that information to decision makers.
Term
Balance Sheet
Definition
Used to report the financial position (assets, liabilities and stockholders equity) of an accounting entity at a point in time.
Term
Accounting Entity
Definition
the organization for which financial data are to be collected
Term
Basic Accounting Equation
Definition
(balance sheet equation)
Assets=Liabilities+Stockholders Equity
Term
Income Statement
Definition
Reports the revenues less the expeneses of the accounting period
Term
Accounting Period
Definition
The time period covered by the financial statements
Term
Statement of Retained Earnings
Definition
reports the way that net income and the distribution of dividends affect the financial position of the company during the accounting period
Term
Statement of Cash Flows
Definition
reports inflows and outflows of cash during the accounting period in the categories of operating, investing and financing
Term
Notes
Definition
(footnotes) Provide supplemental information about the financial condition of a company without which the financial statements cannot be fully understood
Term
Generally Accepting Accounting Principles
Definition
GAAP. Are the measurement rules used to develop the information in financial statements
Term
Securities and Exchange Commission
Definition
SEC. Governemnt agency that determines the financial statements that public companies must provide to stockholders and the measurement rules that they must use to produce them.
Term
Financial Accounting Standards Board
Definition
FASB. Private sector body that works out the detailed rules that become GAAP.
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