Chapter 1

Annual Report

A document distributed to shareholders or other interested parties that contains the financial statements etc.

Cost Accounting

A subset of managerial accounting that relates to the determination and accumulation of product, process or service costs

Securities and Exchange Commission

A unit of the federal government that is responsible for establishing regulations and ensuring full disclosure to investors about companies and their securities that are traded in interstate commerce

Financial Accounting

Accounting that focuses on reporting an entity's financial position at a point in time and/or its results of operations and cash flows for a period of time

Managerial Accounting

Accounting that is concerned with the internal use of economic and financial information to plan and control many of the activities of an entity and to support the management decision-making process

Accrual Accounting

Accounting that recognizes revenues and expenses as they occur, even though the cash receipt from the revenue or the cash disbursement related to the expense may occur before or after the event

Investor

An organization or individual who has an ownership interest in the firm

Creditor

An organization or individual who lends to the entity

Entity

An organization, individual or group of organizations or individuals for which accounting services are performed

Cash Flow

Cash receipts or disbursements of an entity

Independence

Personal characteristic of an accountant that refers to both appearing and in fact being objective and impartial

Bookkeeping

Procedures that are used to keep track of financial transactions and accumulate the results of an entity's financial activities

Public Accounting

Segment of the accounting profession that provides auditing, income tax accounting and management consulting services to clients

Controller

The job title of the person who is the chief accounting officer of an organization

Integrity

The personal characteristic of honesty, including being forthright in dealings and communications with others

Objectivity

The personal characteristic of impartiality, including freedom from conflict of interest

Internal Auditing

The practice of auditing within a company by employees of the company

Auditing

The process of examining the financial statements of an entity by an independent third party with the objective of expressing an opinion about the fairness of the presentation of the entity's financial position, results of operations, changes in financial position and cash flows

Accounting

The process of identifying, measuring and communicating economic information about an organization for the purpose of making decisions and informed judgments