Accounting

AAA

American Accounting Association

AICPA

American Institute of Certified Public Accountants

FASB

Financial Accounting Standards Board

GAAP

Generally Accepted Accounting Procedures

GAAP

Must be followed by publicly owned companies unless they can show that doing so would produce misleading information.

SEC

Securities and Exchange Commission

Social Entitys

are non-profit organizations, such as cities, public schools & public hospitals.

Auditor's Report

contains the auditor's opinion about the fair presentation of the operating results and financial position of the business and also confirms the financial information is prepared in conformity with generally accepted accounting principles

Separate Entity Assumption

describes the concept of keeping the firms financial records separate from the owners financial records.

Corporation

is a business entity that is separate from its owners. A corporation has a legal right to own property and do business in its own name.

Stock o closely held corporations

is not traded on an exchange.

Auditing

is the review of financial statements to assess their fairness and adherence to generally accepted accounting principles. Accountants who are CPA's perform financial audits

Closely held corporations

privately owned corporations

The accounting process involves

recording, classifying, summarizing, interpreting, and communicating financial information about an economic or social entity.

Managerial accounting

referred to as private accounting involves working for a single business in industry.

The SEC is responsible for

reviewing the accounting methods used by publicly owned corporations. The SEC has delegated this review to the accounting profession but still has the final say on any financial accounting issue faced by publicly owned corporations. If the sec does not agree with the reporting that results from an accounting method, the SEC can suspend trading on a company's shares on the stock exchange.

discussion memorandum

to explain the topic being considered

Accounting system

used to accumulate data about a firm's financial affairs, classify the data in a meaningful way, and summarize it in periodic reports called financial statements.

Accountant

Accountant positions usually require a bachelor's degree but are sometimes filled by experienced bookkeepers or individuals with a two-year college degree. Most entry level accountant positions do not have an experience requirement. Both the education and experience requirements vary depending on the size of the firm.

Accounting Clerk

Accounting clerk positions require one to two accounting courses and little or no experience.

Accounting Defined

Accounting is the process by which financial information about a business is recorded, classified, summarized, interpreted & communicated to owners, managers & other interested parties.

What is accounting?

Accounting provides financial information about a business or non-profit organization. Owners, Investors, & Managers & other interested parties need financial information to make decisions. Because accounting is used to communicate financial information, it is often called the language of business.

Bookkeeper

Bookkeeper positions usually require one to two years of accounting education plus experience as an accounting clerk

The accountant

Establishes the records and procedures that make up the accounting system. Supervises the operation of the system. Interprets the resulting financial information

IASC

International Accounting Standards committee was formed in 1973

Tax Accounting

Involves tax planning and tax compliance. IT deals with the preparation of tax returns and the sudit of those returns. It involves giving advice to clients on how to structure their financial affairs in order to reduce their tax liability.

Sole proprietorship

The owner of a sole proprietorship is legally responsible for the debts and taxes of the business. If the business is unable to pay its debts, the creditors (people, companies or government agencies to whom the business owes money) can turn to the owner for payment.

CPA

To become a CPA, an individual must have a certain number of college credits in accounting courses, demonstrate good personal character, pass the uniform CPA examination & fulfill the experience requirements of the state of practice.

Corporate owners called stockholders or shareholders

are not personally responsible for the debts or taxes of the corporation. If the corporation is unable to pay its bills the most stockholders can lose is their investment in the business

Management advisory Services

helping clients improve their information system or their business performance

Governmental accounting

involves keeping financial records and preparing financial reports as part of the staff of federal, state or local governmental units.

AAA definition

is a group of accounting educators who research possible effects of a proposed FASB statement and offer their opinions

Partnership

is an entity owned by two or more people. The partnership structure is common in businesses that offer professional services such as law firms, accounting firms, architecture firms, medical practices & dental practices. At the beginning of the partnership, two or more individuals enter into a contract that details the rights, obligations & limitations of each partner, including the amount each partner will contribute to the business, each partners percentage of partnership, each partners share of the profits, the duties each partner will perform, the responsibility each partner has for the amounts owed by the business to creditors and tax authorities.

Entity

is recognized as having its own separate identity. An entity may be an individual, a town, university or a business.

International Accounting

is the study of the accounting principles used by different countries

Stock

issued in the form of stock certificates, represents the ownership of the corporation.

Managerial accountants

perform activities including: establishing accounting policies, managing the accounting system, preparing financial statements, interpreting financial information, providing financial advice to management, preparing tax forms, performing tax planning services, preparing internal reports for management

Accountants usually choose to practice in one of three areas

public accounting, managerial accounting or governmental accounting

Economic Entity

refers to a business or organization whose major purpose is to produce a profit for its owners.