acct ex 1

Chart

A list of all ledger identification accounts and identification numbers, not including account balances.

General ledger

A collection of accounts and account balances is referred to as a

Expense Recognition Principle

A company records the expenses it incurred to generate the revenue reported

Full Discolsure principle

A company reports the details behind financial statements that would impact users decisions.

SEC

A government agency that enforces the proper use of GAAP

FASB

A group that sets accounting principles in the united states

Public accountants

Accounting professionals who provide services to many clients

Double entry accounting

Demands the accounting equation to remain in balance.

Internal Users

Directly manages the organization. Creates internal reports are designed for the needs of the CEO

External Users

Does not directly run the organization and have limited access to its accounting information. General purpose financial statements.

Audit

Examines weather financial statements are prepared using GAAP it does not ensure absolute accuracy of the statements

Journal

Has a complete record of every transaction recorded

Ethics

Principles that determine weather an action is right or wrong

Sarbanes-Oxley Act

Requires documentation and verification of internal controls and increases emphasis on internal control effectiveness

Dodd-Frank Act

Requires the SEC to pay whistleblowers

Revenue recognition principle

Revenue is recognized when goods or services are provided to customers and at the amount expected to be received from the customer.

Fraud Triangle

Three factors push a person to commit fraud: opportunity, pressure, and rationalization.

GAAP (Generally Accepted Accounting Principles)

a collection of accounting rules set by the FASB

Measurement principle (cost principle)

accounting information is based on actual cost. If cash is given for a service, its cost is measured by the cash paid.

Account

contains a record of decreases and increases in a specific revenue, expense, asset, liability, or equity.

chart of accounts

is a list of all ledger accounts and has an identification number assigned to each account.

Accounting Cycle

steps in preparing financial statements

perpetual inventory system

updates accounting records for each purchase and sale of inventory

periodic inventory system

updates the accounting records for merchandise transactions only at the end of a period