accounting
financial statement
A monetary declaration of what is believed to be true about an enterprise
balance sheet
A position statement that shows where the company stands in financial terms at a specific date.
income statement
An activity statement that shows details and results of the company's profit-related activities for a period of time
audit
An investigation of financial statements designed to determine their fairness in relation to generally accepted accounting principles
liquidity
Having the financial ability to pay debts as they become due
corporate governance
Includes the corporate structures and processes for overseeing a company's affairs, for example, the board of directors and the company's internal control processes
external users
Individuals and other enterprises that have a financial interest in the reporting enterprise but that are not involved in the day-to-day operations of that enterprise
general-purpose information
Information that is intended to meet the needs of multiple users that have an interest in the finanacial activities of an enterprise rather than tailored to the specific information needs of one user
control activities
Policies and procedures that management puts in place to address the risks identified during the risk assessment process
bookkeeping
The clerical dimension of accounting that includes recording the routine transactions and day-today record keeping of an enterprise
control environment
The foundation for all the other elements of internal control, setting the overall tone for the organization
cash flow prospects
The likelihood that and enterprise will be able to provide an investor with both a return on the investor's investment and the return of that investment
accounting system
The personnel, procedures, devices and records used by an organization to develop accounting information and communicate that information to decision makers
corporation
a business organized as a separate legal entity and chartered by a state, with ownership divided into transferable shares of capital stock
operating activities
a category in the statement of cash flows that includes the cash effects of all revenues and expenses included in the income statement
financial activities
a category in the statement of cash flows that reflects the results of debt and equity financing transactions
investing activities
a category in the statement of cash flows that reflects the results of purchases and sales of assets, such as land, buildings, and equipment
financial statement
a declaration of information believed to be true and communicated in monetary terms
deflation
a decline in the general price level, resulting in an increase in the purchasing power of the monetary unit
negative cash flows
a payment of cash that reduces the enterprise.
creditor
a person or organization to whom debt is owned
internal control
a process designed to provide reasonable assurance that the organization produces reliable financial reports, complies with applicable laws and regulations, and conducts its operations in an efficient and effective manner
risk assessment
a process of identifying, analyzing, and managing those risks that pose a threat to the achievement of the organization's objective
statement of financial position
also called the balance sheet
statement of cash flows
an activity statement that explains the enterprise's change in cash in terms of its operating, investing, and financing activities
statement of cash flows
an activity statement that shows the details of the company's activities involving cash during a period of time
income statement
an activity statement that subtracts from the enterprise's revenue those expenses required to generate the revenues, resulting in a net income or a net loss
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
stable-dollar assumption
an assumption by accountants that the monetary unit used in the preparation of financial statements is stable over time or changes at a sufficiently slow rate that the resulting impact on financial statements does not distort the information
business entity
an economic unit that controls resources, incurs obligations, and engages in business activities
inflation
an increase in the general price level, resulting in a decline in the purchasing power of the monetary unit
sole proprietorship
an unincorporated business owned by a single individual
partnership
an unincorporated form of business organization in which two or more persons voluntarily associate for purposes of carrying out business activities
liabilities
debts or obligations of an entity that resulted from past transactions. They represent the claims of creditors on the enterprise's assets.
assets
economic resources owned by an entity
positive cash flows
increases in cash that add to the enterprise's cash balance
revenues
increases in the enterprise's assets as a result of profit-oriented activities
internal users
individuals who use accounting information from within an organization
window dressing
measures taken by management specifically intended to make a business look as strong as possible in its balance sheet, income statement, and statement of cash flows
expenses
past, present, or future reductions in cash required to generate revenues
management accounting
providing information that is intended primarilty for use by internal management in decision making required to run the business
disclosure
the accounting principle of providing with financial statements any financial and other facts that are necessary for proper interpretation of those statements
owner's equity
the excess of assets over liabilities. The amount of the owners' investment in the business, plus profits from successful operations that have been retained in the business
information and communication
the organization's process for capturing operational, financial, and compliance-related information necessary to run the business, and communicating that information downstream(from management to empolyees), upstream(form emplyees to management), and across the organization
return on investment
the payment of an amount (interest, dividends) for using another's money
retained earning
the portion of stockholders' equity that has accumulated as a result of profitable operations
monitoring
the process of evaluating the effectiveness of an organization's system of internal control over time, including both ongoing management and supervisory activities and periodic separate evaluations
intefrity
the qualities of being complete, unbroken, unimpaired, sound, honest, and sincere
return of investment
the repayment to an investor of the amount originally invested in another enterprise
cost principle
the widely used principle of accounting for assets at their original cost to the current owner
capital stock
transferable units of ownership in a corporation