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accounting terms chapter 1-2
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the owners equity of an enterprise organized as a corporation


stock holders equity


measures taken by management specifically intended to make a business look as strong as possible in its balance sheet income statement and statement of cash flows


window dressing


an assumption by accountants that the monetary unit used in the preparation of financial statements is stable over time or changes at a sufficiently low rate that the resulting impact on financial statements does not distort the information


stable dollar assumption


a category in the statement of cash flows that includes the cash effects of all revenues and expenses included in the income statement


operating activities


the accounting principle of providing with financial statements any financial and other facts that are necessary for proper interpretation of those statements.


disclosure


an assumption by accountants that a business that a business will operate in the foreseeable future unless specific evidence suggests that this is not a reasonable assumption


going-concern assumption


the excess of assets over liabilities the amount of the owners\' investment in the business plus profits from successful operations that have been retAined in the business


owner\'s equity


the widely used principle of accounting for assets at their original cost to the current owner


cost principle


a category in the statement of cash flows that reflect the results of purchases and sales of assets such as land buildings and equipment


investing activities


increases in the enterprises assets as a result of profit oriented activities


revenues


an activity statement that explains the enterprises change in cash in terms of its operating investing and financing activities


statement of cash flows


the organization\'s process for capturing operational, financial, and complianace related info necessary to run the business, and communicating that info downstream (from management to employees) upstream (from employees to management) and across the organization


information and communication


having the financial ability to pay debts as they become due


liquidity


a decline in general price level resulting in an increase in the purchasing power of the monetary unit


deflation


owner of capital stock in a corporation


stock holder


a payment of cash that reduces the enterprises cash balance


negative cash flows


the likelyhood that an enterprise will be able to provide an investor with both a return on the investor\'s investment and the return of that investment


cash flow prospects


balance sheet


statement of financial position


a person or organization to whom debt is owed


creditor


increases in cash that add to enterprises cash flow


positive cash flows


past, present, or future reductions in cash requires to generate revenues


expenses


an economic unit that controls resources, incurs obligations, and engages in business activities


business entity


providing information that is intended primarily for use by internal management and decision making required to run thw business


management accounting


a professional accounting organization that intends to influence the concepts and ethical practice of management accounting and financial management


institute of management accountants


a professional accounting organization of certified public accountants that engage in a variety of professional activities including establishing auditing standards for private companies, conducting research, and establishing industry specific financial reporting standards


america institute of CPA\'s


the repayment to an investor of the amount originally invested in another enterprise


return of investment


a professional designation issued by the institute of internal auditors signifying expertise in internal auditing


certified internal auditor


the financial statement showing the financial position of an enterprise by summarizing its assets, liabilities, and owners equity at a point in time. also called financia position


balance sheet


providing info about the financial resources, obligations, and activities of an economic entity that is inteneded for use primarily by external decision makers --- investors and creditors


financial accounting


a position statement that shows where the company stands in financial terms at a specific date


balance sheet / financial position


an unincorporated business owned by a single individual


sole proprietorship


A professional accounting organization consisting primarily of accounting educators that are dedicated to improving accounting education, research and practice.


American Accounting Association


principles that provide the frame work for determining what info is to be included in financial statements and how that info is to be presented


generally accepted accounting principles


policies procedures that management puts in place to address the risks identified during the risk assesment process


control activities


a category in the statement of cash flows that reflect the results of debt and equity financing transactions


financing activities


transferable units of ownership in a corporation


capital stock


a governmental organization that has the legal power to establish accounting principles and financial reporting requirements for publicly held companies in the U.S


securities and exchange commission (SEC)


a monetary declaration of what is believed to be true about an enterprise


financial statement


a business organized as a seperate legal entity and character by a state, with ownership into transferable shares of capital stock


corporation


another name for balance sheet


statement of financial position


a process of identifying, analyzing, and managing those risks that pose a threat to the acheivement of those organization\'s objectives


risk assesment


individuals who use accounting information from within an organization (store managers, board of directors, plant managers etc)


internal users


a professional accounting organization that is dedicated to the promotion and development of the practice of internal auditing .


institute of internal auditors


the clerical dimensions of accounting that include recording the routine transactions and day to day record keeping of an enterprise


book keeping


debts or obligations of an entity that resulted from past transactions. they represent the claims of creditors on the enterprises assets


liabilities


a federal gov\'t agency that audits many other agencies of the federal govt and other organizations that do business with the federal gov\'t and reports it\'s findings to congress


gov\'t accountability office


the qualities of being complete, unbroken, unimpaired, sound, honest, and sincere


integrity


the personnel, procedures, devices, and records used by an organization to develop accounting info and communicate that information to decision makers.


accounting system


individuals and other enterprises that have a financial interest in the reporting enterprise but that are not involved in the day to day operations of that enterprise


external users


an activity statement that shows details and results of the company profit related activities for a period of time


income statement


economic resources owned by an entity


assets


an increase in the general price level resulting in a decline in the purchasing power of the monetary unit


inflation


a landmark piece of securities law, designed to improve the effectiveness of corporate financial reporting through enhanced accountability of auditors, boards of directors, and management


sarbanes-oxley


a voluntary private-sector organization dedicated to improving the quality of financial reporting through business ethics, effective internal controls, and corporate governance


commitee of sponsoring organizations of the treadway commission (COSO)


an unincorporated form of business organization in which two or more persons voluntarily associate for purposes of carrying out business activities


partnership


an activity statement that shows the details of the company\'s activities involving cash during a period of time


statement of cash flows


an investigation of financial statements


audit


information that is intended to meet the needs of multiple users that have an interest in the financial activities of an enterprise rather than tailored to the specific information needs of one user.


general purpose information


a gov\'t organization that handles millions of income tax returns filed by individuals and business and performs audit functions to verify the data contained in them returns


internal revenue service


includes the corporate structures and processes for overseeing a company affairs, for example, the board to directors and company\'s internal control processes


corporate governance


the portion of stockholders equity that has accumulated as a result of profitable operations


retained earnings


a professional designation issued by the institute of management accountants signifying expertise in management accounting


certified management accountant


the foundation for all the other elements of internal control, setting the overall tone for the organzation


control environment


the process of evaluating the effectiveness of an organization\'s system of internal control over time, including both ongoing management and supervisory activities and periodic seperate evaluations


monitoring


a process designed to provide reasonable assurance that the organization produces reliable financial reports, complies with applicable laws and regulations, and conducts its operations in an efficient and effective manner


internal control


a private sector organization that is responsible for determining generally accepted accounting principles in the U.S


financial accounting standards board (FASB)


an accountant who is licensed by a after meeting rigerous education expertise and examination requirements


certified public accountant


the payment of an amount (interest, dividends) for using another\'s money


return on investment


a quasi-governmental body charged with oversight of the public accounting profession. the (PCAOB) sets auditing standards for audits of publicly traded companies


public company accounting oversight board


the group responsible for creating and promoting international financial report standards


international accounting standards board (IASB)