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Accounting Final Exam Definitions

Accounting Final Exam Definitions - Accounting Final Exam...

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Accounting Final Exam Definitions Chapter 1 Accounting The information system that identifies, records, and communicates the economic events of an organization to interested users. Assets Resources a business owns. Auditing The examination of financial statements by a certified public accountant in order to express an opinion as to the fairness of presentation. Balance sheet A financial statement that reports the assets, liabilities, and owner's equity at a specific date. Basic accounting equation Assets = Liabilities + Stockholders' Equity. Bookkeeping A part of accounting that involves only the recording of economic events. Corporation A business organized as a separate legal entity under state corporation law, having ownership divided into transferable shares of stock. Cost principle An accounting principle that states that companies should record assets at their cost. Dividend A distribution by a corporation to its stockholders on a pro rata (equal) basis. Economic entity assumption 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. Ethics The standards of conduct by which one's actions are judged as right or wrong, honest or dishonest, fair or not fair. Expenses The cost of assets consumed or services used in the process of earning revenue. Financial accounting The field of accounting that provides economic and financial information for investors, creditors, and other external users. Financial Accounting Standards Board (FASB) A private organization that establishes generally accepted accounting principles (GAAP). Forensic accounting An area of accounting that uses accounting, auditing, and investigative skills to conduct investigations into theft and fraud. Generally accepted accounting principles (GAAP) Common standards that indicate how to report economic events. Income statement 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. International Accounting Standards Board (IASB) An accounting standard-setting body that issues standards adopted by many countries outside of the United States. Liabilities Creditor claims on total assets. Management consulting An area of public accounting ranging from development of accounting and computer systems to support services for marketing projects and merger and acquisition activities. Managerial accounting The field of accounting that provides internal reports to help users make decisions about their companies.
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Monetary unit assumption An assumption stating that companies include in the accounting records only transaction data that can be expressed in terms of money.
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