Accounting Profession
Public Corporation
A company whose shares are publicly traded and are usually held by a large number (hundreds or thousands) of shareholders
partnership
A type of business organization in which two or more individuals pool money, skills, and other resources, and share profit and loss in accordance with terms of the partnership agreement
Corporation
An entity such as a business, municipality, or organization, that involves more than one person but that has met the legal requirements to operate as a single person, so that it may enter into contracts and engage in transactions under its own identity
Stockholders
An individual, group, or organization that holds one or more shares in a company
"Cooking the books"
Falsification of accounting records to give a misleading picture of a firm's financial position or the results of its operations; an illegal practice
Private Corporation
Incorporated firm whose shares are not publicly traded, and are held by a small number of stockholders (shareholders)
private accounting
Perform accounting functions for a single business; involves setting up systems and recording business transactions that are aggregated into financial statements for one company
Bachelor's Degree
Post-secondary degree awarded to an individual after completion of undergraduate course work usually taking eight semesters and 120 credits to complete
SEC
Securities and Exchange Commission
public accounting
Sells accounting services to the general public; involves being an independent third party that examines the financial statements and supporting systems of client companies
pump and dump scheme
When someone holding a stock artificially drives its share price up by floating exaggerated or false reports of its value through Web sites, online postings
Global economy
World-wide economic activity between various countries that are considered intertwined and thus can affect other countries negatively or positively
merchandising business
a business dedicated to the purchase of finished goods and their resale for a profit
Financial statements
a collection of reports about an organization's financial results, financial condition, and cash flows
Generally Accepted Accounting Principles (GAAP)
a common set of accounting principles, standards and procedures that companies must follow when they compile their financial statements; aka "the rules"
Ponzi Scheme
a fraudulent investing scam promising high rates of return with little risk to investors; this pyramid scheme generates returns for older investors by acquiring new investors
White Collar Crime
a nonviolent crime committed for financial gain (i.e. securities fraud, embezzlement, corporate fraud, money laundering)
business
a person, partnership, or corporation engaged in commerce, manufacturing, or a service; profit-seeking enterprise or concern
Financial Accounting Standards Board (FASB)
a private, non-profit organization market regulator whose primary purpose is to establish and improve generally accepted accounting principles (GAAP) within the United States
Annual report
a publication issued to a company's shareholders, creditors, and regulatory organizations following the end of its fiscal year. The report typically contains at least an income statement, balance sheet, statement of cash flows, and accompanying footnotes
sole proprietorship
a type of business ownership in which someone owns an unincorporated business by himself or herself
certified public accountant (CPA)
an accounting professional who has passed the CPA exam administered by the AICPA and has fulfilled the educational and work related experience requirements for certification
Madoff scandal
an investment scandal masterminded by the former chairman of the Nasdaq, who also ran a hedge fund, that resulted in $65 million Ponzi scheme.
Audit
an objective examination and evaluation of the financial statements of an organization to make sure that the records are a fair and accurate representation of the transactions they claim to represent
manufacturing business
any business that uses components, parts or raw materials to make a finished good; these finished goods can be sold directly to consumers or to other manufacturing businesses that use them for making a different product
E-Commerce
commercial transactions conducted electronically on the Internet
Blue Collar Crime
crimes committed by an individual from a lower social class causing injury to person and property
penny stocks
high-risk stocks that typically sell for less than $1 per share when they are first offered
Employees
individuals who work for another person or for a company for wages or a salary
Sarbanes-Oxley (SOX) Act of 2002
legislation passed by U.S. Congress to protect investors from the possibility of fraudulent accounting activities by corporations; purpose: strict reforms to improve financial disclosures from corporations and prevent accounting fraud.
service business
provides intangible products, such as accounting, banking, consulting, cleaning, landscaping, education, insurance, treatment, and transportation services
Ethics
rules of behavior based on ideas about what is morally good and bad
securities
stocks and bonds
American Institute of Certified Public Accountants (AICPA)
the association that develops and scores the Uniform CPA examination; association also sets ethical standards for the profession and U.S. auditing standards for private companies, nonprofit organizations, federal, state and local governments
Controller
the chief accounting officer and heads the accounting department
Enron scandal
the largest bankruptcy reorganization in American history at the time (2001), and also cited as the biggest audit failure stemming from an American energy company "cooking the books"
Business Ethics
the study and examination of moral and social responsibility in relation to business practices and decision-making in business
accounting
the system of recording and summarizing business and financial transactions and analyzing, verifying, and reporting the results
Fraud
wrongful or criminal deception intended to result in financial or personal gain
