Accounting CH. 1

Earned by selling goods or services to customers.

revenues

The financial reports of a business are assumed to include the results of only that business's activities.

separate entity

The total amounts invested and reinvested in the business by its owners.

stockholders equity

financing activities

Transactions with lenders (borrowing and repaying cash) and stockholders (selling company stock and paying dividends).

Financial information that depicts the economic substance of business activities.

faithful representation

Buying and selling productive resources with long lives.

investing ideas

The amounts owed by the business.

liabilities

Activities directly related to running the business to earn profit.

operating activities

A company that sells shares of its stock privately and is not required to release its financial statements to the public.

private company

A company that has its stock bought and sold by investors on established stock exchanges.

public company

A feature of financial information that allows it to influence a decision.

relevance

An incorporated business that issues shares of stock as evidence of ownership.

corporation

A system that collects and processes financial information about an organization and reports that information to decision makers.

Accounting

An unincorporated business owned by two or more persons.

Partnership

Securities and Exchange Commission.

SEC

Measurement of information about a business in the monetary unit (dollars or other national currency).

Unit of Measure

The resources owned by a business.

assets

The costs of business necessary to earn revenues.

expenses