accounting

financial statement

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

balance sheet

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

income statement

An activity statement that shows details and results of the company's profit-related activities for a period of time

audit

An investigation of financial statements designed to determine their fairness in relation to generally accepted accounting principles

liquidity

Having the financial ability to pay debts as they become due

corporate governance

Includes the corporate structures and processes for overseeing a company's affairs, for example, the board of directors and the company's internal control processes

external users

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

general-purpose information

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

control activities

Policies and procedures that management puts in place to address the risks identified during the risk assessment process

bookkeeping

The clerical dimension of accounting that includes recording the routine transactions and day-today record keeping of an enterprise

control environment

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

cash flow prospects

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

accounting system

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

corporation

a business organized as a separate legal entity and chartered by a state, with ownership divided into transferable shares of capital stock

operating activities

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

financial activities

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

investing activities

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

financial statement

a declaration of information believed to be true and communicated in monetary terms

deflation

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

negative cash flows

a payment of cash that reduces the enterprise.

creditor

a person or organization to whom debt is owned

internal control

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

risk assessment

a process of identifying, analyzing, and managing those risks that pose a threat to the achievement of the organization's objective

statement of financial position

also called the balance sheet

statement of cash flows

an activity statement that explains the enterprise's change in cash in terms of its operating, investing, and financing activities

statement of cash flows

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

income statement

an activity statement that subtracts from the enterprise's revenue those expenses required to generate the revenues, resulting in a net income or a net loss

going-concern assumption

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

stable-dollar assumption

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

business entity

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

inflation

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

sole proprietorship

an unincorporated business owned by a single individual

partnership

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

liabilities

debts or obligations of an entity that resulted from past transactions. They represent the claims of creditors on the enterprise's assets.

assets

economic resources owned by an entity

positive cash flows

increases in cash that add to the enterprise's cash balance

revenues

increases in the enterprise's assets as a result of profit-oriented activities

internal users

individuals who use accounting information from within an organization

window dressing

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

expenses

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

management accounting

providing information that is intended primarilty for use by internal management in decision making required to run the business

disclosure

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

owner's equity

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

information and communication

the organization's process for capturing operational, financial, and compliance-related information necessary to run the business, and communicating that information downstream(from management to empolyees), upstream(form emplyees to management), and across the organization

return on investment

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

retained earning

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

monitoring

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 separate evaluations

intefrity

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

return of investment

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

cost principle

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

capital stock

transferable units of ownership in a corporation