Chapter 1 - Intro

Sole proprietorship

A business owned by one person who is legally responsible for all debts and taxes.

Partnership

A business owned by two or more people who are legally responsible for the debts and taxes or the business.

Tax accounting

A business that provides tax compliance and tax planning services

Accounting system

A process designed to accumulate, classify, and summarize financial data.

Corporation

A publicly or privately owned business that is separate from its owners; has a legal right to own property and do business in its name.

Public accountants

Accountants who work for firms that perform accounting services for other companies.

Auditors report

An independent accountant's review of a firms financial statements.

Certified Public Accountant

CPA An independent accountant who provides accounting services to the public for a fee.

Stock

Certificates that represent ownership in the corporation

Generally Accepted Accounting Principles

GAAP - Accounting standards developed and applied by professional accountants

Creditor

One to whom money is owed

Stockholders/shareholders

Owners of the corporation

Financial Statements

Periodic reports of a firms financial position or operating results.

Separate entity assumption

The concept of keeping a firms financial records separate from the owner's personal financial records.

Accounting

The process by which financial information about a 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 GAAP.

Managerial accounting

Work performed by an accountant for a single business.

Government accounting

Work performed for a federal, state or local government