Accounting
information and measurement system that identifies, records, and communicates relevant, reliable, and comparable info about an org's business activities
Record Keeping
(bookkeeping)
recording of transactions and events, either manually or electronically
External Users
they are not directly involved in running the org
sharholders, lenders, suppliers, consumers, etc
Internal Users
they are directly involved in managing and operating an org
Ethics
beliefs that distinguish right from wrong
Generally Accepted Accounting Principles
(GAAP) concepts and rules that make info in financial statements relevant, reliable, and comparable
Matching Principle
prescribes that a company must record its expenses incurred to generate the revenue reported
Cost Principle
accounting info is based on actual cost
Going-concern Principle
accounting info reflects a presumption that the business will continue operating instead of being closed or sold
Monetary Unit Principle
express transactions and events in monetary, or money, units
Revenue Recognition Principle
provides guidance on when a company must recognize revenue
Business Entity Principle
a business is accounted for separately from other business entities, including its owner
Full Disclosure Principle
requires a company to report the details behind financial statements that would impact users' decisions
Time Period Principle
presumes that the life of a company can be divided into time periods, such as months and years, and that useful reports can be prepared for those periods
Asset
resource with future benefits that are owned or controlled by a company
Asset
resource with future benefits that are owned or controlled by a company
Liability
what a company owes its nonowners (creditors) in future payments, products, or services
Equity
(owner's capital)
claim of its owner(s)
Dividend
distribution to stockholders of assets
Revenue
increase retained earnings and are te assetts earned from a company's earnigs activities
Expense
decrease retained earnings and are the cost of assets or services used to earn revenues
Net Income
occurs when revenues exceed expenses
Source Document
identify and describe transactions and events entering the accounting process
Account
record of increases and decreases in a specific asset, liability, equity, revenue, or expense item
General Ledger
record containing all accounts used by a company
Chart of Accounts
list of all accounts a company uses and includes an identification number assigned to each account
T-Account
represents a ledger account and is a tool used to understand the effects of one or more transactions
Double-Entry Accounting
requires that each transaction affect, and be recorded in, at least two accounts
General Journal
gives a complete record of each transaction in one place; also shows the credits/debits of each transaction
Posting
process of transferring journal entry info to ledger
Trial Balance
list of accounts and their balances at a point in time
Unearned Revenue
a liability that is settled in the future when a cocmpany delivers its products or services
Prepaid Assets
asset that reprents prepayments of future expenses
