Accounting Chapter 1 Pearson MyLab

CMAs

Certified Management Accountants

CPAs

Certified Public Accountants

F/S

Financial Statement

Financials

Financial Statements

Financial Statements

Financial reports that summarize the financial condition and operations of a business. Includes the Income Statement, Statement of Owner's Equity, Balance Sheet, and the Statement of Cash Flows. Specifically in that order.

N/P

Notes Payable

Return on Assets

How well a company uses its assets. ROA = Net Income/Average Total Assets Average Total Assets= Beginning Total Assets/Ending Total Assets/all divided by 2

Monetary unit Assumption:

Requires that items on any financial statement must be recorded with a monetary unit.

ROA

Return on Assets

I/S

Income Statement

FASB

The Financial Accounting Standards Board - Oversees creation and enforcement of accounting standards in the USA

Income Statement

A financial statement showing the revenue and expenses for a fiscal period. Reveals net income, or net loss.

Statement of Cash Flows

A financial statement that provides financial information about the cash receipts and cash payments of a business for a specific period of time.

Balance Sheet

A financial statement that reports assets, liabilities, and owner's equity on a specific date. Requires the Owner's Equity computed in the earlier statement

Audit

A review of a companies financial statements and records

Statement of Owner's Equity

A summary of the changes in owner's equity that have occurred during a specific period of time, such as a month or a year. Requires the net income or loss recorded in the Income Statement. Ends with 'Owner, Capital, Month/Day, Year'

A = L + E (OE)

A: Assets L: Liability E: Equity OE: Owner's Equity

A/P

Accounts Payable

Liability Accounts

Accounts Payable, Notes Payable, Accrued Liability (such as Utilities Payable, Taxes Payable, Rent Payable, and Salaries Payable) and Unearned Revenue

Economic entity Assumption:

An assumption that every economic entity can be separately identified and accounted for.

Going Concern Assumption

Assumes a business entity will remain in operation long enough to use its resources.

Cost principle:

acquired assets and services should be recorded at then actual cost. (The amount paid/ on the receipt)

SOCF

Statement of Cash Flows

SOOE

Statement of Owners Equity

Accounting Equation

Assets = Liabilities + Owner's Equity

B/S

Balance Sheet

GAAP

Generally Accepted Accounting Principles

IASB

International Accounting Standards Board

IFRS

International Financial Reporting Standards

OCOB

Ordinary Course of Business

Equity Accounts

Owner Capital, Owner Withdrawals, Revenues, Expenses (such as Rent Expense, Salaries Expense, and Utilities Expense)

SEC

Securities and Exchange Commission - Oversees USA financial markets

Account

a record summarizing all the information pertaining to a single item in the accounting equation

Cash flows from operating activities

cash inflows and outflows directly related to earnings from normal operations (doesn't include anything on account, or payable)

Cash flows from financing activities

cash inflows and outflows related to external sources of financing (owners and creditors) for the enterprise

Cash flows from investing activities

cash inflows and outflows related to the sale or purchase of investments and long-lived assets

Asset Accounts

cash, accounts receivable, notes receivable, prepaid accounts, supplies, equipment, buildings, land, and fixtures.