The information system that identifies, records, and communicates the economic events of an organization to interested users (p. 4)
AssetsResources owned by a business. (p. 12)
AuditingThe examination of financial statements by a certified public accountant in order to express an opinion as to the fairness of presentation. (p. 7)
Balance SheetA financial statement that reports the assets, liabilities,and owner"s equity at a specific date. (p. 21)
Basic Accounting EquationAssets = Liabilities + Owner"s Equity. (p. 12)
BookeeepingA part of accounting that involves only the recording of economic events. (p. 7)
CorporationA business organized as a separate legal entity under state corporation law, having ownership divided into transferable shares of stock. (p. 11)
Cost PrincipleAn accounting principle that states that assets should be recorded at their cost. (p. 10)
DrawingsWithdrawal of cash or other assets from an unincorporated business for the personal use of the owner(s). (p. 13)
Economic Entity AssumptionAn assumption that requires that the activities of the entity bekept separate and distinct from the activities of its owner and all other economic entities. (p. 11)
EthicsThe standards of conduct by which one"s actions are judged as right or wrong, honest or dishonest, fair or not fair. (p. 9)
ExpensesThe cost of assets consumed or services used in the process of earning revenue. (p. 13)
Financial AccountingThe field of accounting that provides economic and financial information for investors, creditors, and other external users. (p. 7)
Financial Accounting Standards Board (FASB)A private organization that establishes generally accepted accounting principles. (p. 10)
Generally Accepted Accounting Principles (GAAP)Common standards that indicate how to report economic events. (p. 9)
Income StatementA financial statement that presents the revenues and expenses and resulting net income or net loss of a company for a specific period of time. (p. 21)
Investments by OwnerThe assets put into the business by the owner. (p. 13)
LiabilitiesCreditorship claims on total assets. (p. 12)
Management ConsultingAn area of public accounting that involves financial planning and control and the development of accounting and computer systems. (p. 28)
Management AccountingThe field of accounting that provides economic and financial information for managers and other internal users. (p. 7)
Monetary Unit AssumptionAn assumption stating that only transaction data that can be expressed in terms of money be included in the accounting records. (p. 10)
Net IncomeThe amount by which revenue exceeds expenses. (p. 13)
Net LossThe amount by which expenses exceed revenues. (p. 13)
Owner"s EqityThe ownership claim on total assets. (p. 12)
Owner"s Equity StatementA financial statement that summarizes the changes in owner"s equity for a specific period of time. (p. 21)
PartnershipAn association of two or more persons to carry on as co-owners of a business for profit. (p. 11)
Private (or managerial) AccountingAn area of accounting whthin a company that involves such activities as cost accounting, budgeting, and accounting information systems. (p. 28)
ProprietorshipA business owned by one person. (p. 11)
Public AccountingAn area of accounting in which the accountant offers expert service to the general public. (p. 28)
RevenuesThe gross increase in owner"s equity resulting from business activities entered into for the purpose of earning income. (p. 13)
Securities and Exchange Commission (SEC)A government agency that requires companies to file financial reports in accordance with generally accepted accounting principles. (p. 10)
Statement of Cash FlowsA financial statement that summarizes information about the cash inflows (receipts) and cash outflows (payments) for a specific period of time. (p. 21)
TaxationAn area of public accounting that involves tax advice, tax planning, and preparing tax returns. (p. 28)
TransactionsThe economic events of an enterprise that are recorded by accountants.

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(p. 14)