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Financial Accounting Chapter 1

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Financial Accounting Weygandt Chapter 1 Flashcards

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Created Sep 7, 2010 by megmabe2

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1 Accounting The information system that identifies, records,and communicates the economic events ofan...

2 Assets Resources a business owns.

3 Balance Sheet Financial statement that reports the assets,

liabilities, and owner's equity at a specific...

4 Accounting Equation Assets = Liabilities + Stockholder's Equity

5 Bookkeeping A part of accounting that involves only therecording of economic events

6 Common Stock The total amount paid in by stockholders for

the shares they purchase.

7 Corporation

A separate legal entity, organized under

corporate law, having ownership divided intotransferable...

8 Cost Principle An accounting principle that states that

companies should record assets at their cost.

9 Dividend A distribution by a corporation to its

stockholders on a pro rata or equal basis.

10 Economic Entity Assumption Requires that the activities of an entity be keptseparate and distinct from the activities...

11 Ethics

The standards of conduct by which one's

actions are judged right or wrong, honest ordishonest,...

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12 Exenses The cost of assets consumed or services used

in the process of earning revenue.

13 Fair Value Principle An accounting principle that states that

companies should record their assets at fair...

14 Faithful representation Numbers and descriptions of financialinformation match what really existed or

happened.

15 Financial Accounting The field of accounting that provides economicand financial information for investors,

creditors,...

16 FASB

Financial Accounting Standards Board. A

private organization that establishes generallyaccepted...

17 Income Statement

A financial statement that presents the

revenues and expenses and resulting netincome or net...

18 IASB International Accounting Standards Board. Anaccounting standard-setting body that issues

standards...

19 Liabilities Creditor claims on total assets.

20 Monetary Unit Assumption

An assumption stating that companies includein the accounting records only transaction

data...

21 Net Income The amount by which revenues exceedexpenses.

22 Net Loss The amount by which expenses exceedrevenues.

23 Partnership A business owned by two or more personsassociated as partners.

24 Proprietorship A business owned by one person.

25 PCAOB

Public Company Accounting Oversight Board

(Peekaboo)

It determines auditing standards...

26 Relevance It means that financial information is capable ofmaking a difference in a decision.

27 Retained Earnings Statement A financial statement that summarizes thechanges in retained earnings for a specific...

28 Revenues The gross increase in stockholder's equity

resulting from business activities entered into...

29 Sarbanes-Oxley Act of 2002 (SOX) Law passed by Congress in 2002 intended toreduce unethical corporate behavior.

30 SEC Securities and Exchange Commission. Agovernmental agency that requires companies

to file financial...

31 Statement of Cash Flows A financial statement that summarizesinformation about the cash inflows (receipts)and cash...

32 Stockholder's Equity The ownership claim on a corporation's total

assets.

33 Transactions The economic events of a business that arerecorded by accountants.

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