Basic Accounting Chap.1

accounting standards update

Changes to Accounting Standards Codification are communicated through accounting standards update covering approximately 90 topics

sole proprietorship

a business entity owned by one person, who is legally responsible for the dbts and taxes of the business

partnership

a business entity owned by two or more people who carry on a business for profit and who are legally responsible for the debts and taxws of the business

economic entity

a business or organization whose major purpose is to produce a profit for its owners

social entity

a nonprofit organization, such as a city, oublic school, or public hospital

accounting system

a process designed to accumulate, classify, and summarize financial data

Accounting system

a process designed to accumulate,, classify, and summarize financial data

exposure draft

a proposed solution to a problem being considered by the Financial Accounting Standards Board

corporation

a publicly or privately owned business entity that is separate from its owners and has a legal right to own property and do business in its own name. stockholders are not responsible for the debts or taxes of the business

tax accounting

a service that involves tax compliance and tax planning

statements of financial accounting standards

accounting principles established by the financial accounting standards board

managerial accounting

accounting work carried on by an accountant employed by a single business in industry; the branch of accounting that provides financial info about business segments, activities, or product

managerial accounting

accounting work carried on by an accountant employed by a single business in industry; the branch of accounting that provides financial info about business segments, activities, or products

governmental accounting

accounting work performed for a federal, state, or local governmental unit

discussion memorandum

an explanation of a topic under consideration by the financial accounting standards board

auditor's report

an independent accountant's review of a firms financial statements

entity

anything having its own separate identity, such as an individual, a town, an university, or a business

stock

certificates that represent ownership of a corporation

CPA

certified public accountant. an indepndennt accountant who provides accounting services to the public for a fee

GAAP

generally accepted accounting principles. accounting standards developed and applied by professional accountants.

public accountants

members of firms that perform accounting services for other companies

creditor

one to whom money is owed

Financial statements

periodic reports of a firms financial position or operating results

SEC

securities and exchange commission.SEC is responsible for reviewing the accounting methods used by publicly owned corporations. The SEC has delegated this review to the accounting profession but still has the final say on any financial accounting issue faced by publicly owned corporations. If the SEC does not agree with the reporting that results from an accounting method, the SEC can suspend trading of a company's shares on the stock exchanges.

management advisory services

services designed to help clients improve their information systems or their business performance

The Sarbanes-Oxley Act

significantly tightens regulation of financial reporting by publicly held companies and their accountants and auditors. The Sarbanes-Oxley Act created a five-member Public Company Accounting Oversight Board. The Board has investigative and enforcement powers to oversee the accounting profession and to discipline corrupt accountants and auditors. The Securities and Exchange Commission oversees the Board. Two members of the Board are certified public accountants, to regulate the accountants who audit public companies, and the remaining three must not be and cannot have been CPAs

separate entity assumption

the concept that a business is separate from its owners; the concept of keeping a firm's financial record separate from the owner's person financial records

stockholders

the owners of a corporation, also called shareholders

Accounting

the process by which financial info about business is recorded, classified, summarized, interpreted, and communicated to owners,managers, and other interested parties

auditing

the review of financial statements to assess their fairness and adherence to generally accepted accounting principles

accounting standards codification

the source of authoritative U.S GAAP

international accounting

the study of accounting principles used by different countries