Accounting Chapter 1

Certified Public Accountants (CPAs)

licensed professional accountants who serve the general public.

Audit

examination of a company's financial statements and records

Creditors

Any person or business to who a business owes money

Securities and Exchange Commission (SEC)

U.S. governmental agency that oversees the U.S. financial markets

Economic Entity Assumption

a business entity is an organization that stands apart as a separate economic unit

Sole proprietorship

a business with a single owner

Cost Principle

acquired assets and services should be recorded at their actual (historical) cost

Going Concern Assumption

assumes the entity will remain in operation for the foreseeable future

Corporation

business organized under state law that is a separate legal entity

Partnership

business with two or more owners and not organized as a corporation

Limited-Liability Company (LLC)

company in which member is only liable for his or her own actions

Managerial accounting

focuses on information for internal decision makers, such as the company's managers and employees

Accounting

information system that measures business activities, processes the information into reports, and communicates the results to decision makers

International Accounting Standards Board (IASB)

private organization that oversees the creation and governance of International Financial Reporting Standards (IFRS)

Financial Accounting Standards Board (FASB)

private organization that oversees the creation and governance of accounting standards in the U.S.

Financial accounting

provides information for external decision makers, such as outside investors, lenders, customers, and the federal government

Sarbanes-Oxley Act (SOX)

requires companies to review internal control and take responsibility for the accuracy and completeness of their financial reports

Monetary Unit Assumption

requires items on the financial statements to be measured in terms of a monetary unit

International Financial Reporting Standards (IFRS)

set of global accounting guidelines formulated by the International Accounting Standards Board (IASB)

Certified Management Accountants (CMAs)

specialize in accounting and financial management knowledge - typically work for a single company.

Generally Accepted Accounting Principles (GAAP)

the main U.S. accounting rule book and is currently created and governed by the FASB