Accounting flash cards Test 1

attest function

have to be independent

positive cash flows

increases in cash that add to the enterprises cash balance

current liabilities- expect to pay in one year

long term assets- buildings and trucks

Statement of cash flows

measures cash that comes into business from operations, investors and then leaves the company for same reasons

GAAP

(general accepted accounting principles)- style manual mostly comes from FASB

Financial Reporting

A broad term that describes all information provided to external users, including but not limited to financial statements

Accounting Equation

Assets= liabilities+ owners equity

Assets=

Equity

Securities and Exchange Commission

Government agency responsible for financial reporting by publicly held companies

Institute of Internal Auditors

Internal organization dedicated to the advancement of internal auditing

American Accounting Association

Organization consisting primarily of accounting educators that encouraged improvements in teaching and research

Financial Accounting Standards board

Private-sector organization that establishes accounting standards

Financial Statements

Statement of financial position (balance sheet), income statement, statement of cash flows

Financial Accounting

The area of accounting that refers to providing information to support external investment and credit decisions

Management Accounting

The area of accounting that refers to providing information to support internal management decisions

General-purpose assumption

The fact that the same information is provided to various external users, including investors and creditors

Bookkeeping

The procedural aspect of accounting that involves keeping detailed records of business transactions, much of which is done by computers.

Public Accounting

The segment of the accounting profession that relates to providing audit, tax, and consulting services to clients

negative cash flows

a payment of cash that reduces the enterprises cash balance

balance sheet

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

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

audit

an inspection of the accounting procedures and records by a trained accountant or CPA

materiality

at what point do we decide to declare an asset an asset

Sarbances-Oxley Act

designed to improve the effectiveness of corporate financial reporting through enhanced accountability of auditors

dividens are not an

expense

capitalize

not treated as an asset, treated as an expense

Institute of management accountants

organization dedicated to providing members personal and professional development opportunities in the area of management accounting

Internal control

procedures and processes within an organization that ensure the integrity of accounting information

periodicity

report for a specific period involved with income statement fiscal year

Statement of retained earnings

shows growth in company ( they money you make each year added to previous earnings)

Cost Principle

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

sole proprietorship

unlimited liability ( disadvantage company goes away)

objectivity

we have evidence for all the transactions in which we engage