Accounting Terms
Chapter 1
Accounting- Information and measurement system that identifies records and communicates relevant information about a company’s business activities
Accounting equation- equality involving a company’s assets liabilities and equity, assets equal liability plus equity/ aka balance sheet equation
Assets- resources a business owns or controls that are expected to provide current and future benefits to the business
Auditors- An individual who checks the accuracy, fairness, and general acceptability of accounting records, an external auditor would attest to those checks
Balance sheet- Financial statement that lists types and dollar amounts of assets, liabilities, and equity at a specific date
Bookkeeping- part of accounting that involves recording transactions and events. Either manually or electronically(record keeping)
Business entity assumption- Principle that requires a business to be accounted for separately from its owners and from any other entity
Common stock- Corporations basic ownership share aka capital stock
Conceptual framework- system of interrelated objectives and fundamentals, disseminated by accounting regulators such as the FASB or IASB intended to guide consistent standard setting ad aid accounting practitioners
Contributed capital- Total amount of cash and other assets received from stockholders in exchange for stock aka paid in capital
Corporation- Business that is a separate legal entity under state or federal laws with owners (stockholders/shareholders)
Cost benefit constraint- Criterion that only information with benefits of disclosure greater than the costs of providing it need to be disclosed
Cost principle- accounting principle that prescribes financial statement information to be based on actual costs incurred in business transactions
Dividends- Corporations distributions of assets to its owners