Accounting Chapter 1

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

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 that causes revenue or expense recognition.

Accrual Accounting

Established by the Financial Accounting Foundation to develop guidelines for financial accounting and reporting by state and local governmental units.

Governmental Accounting Standards Board (GASB)

The personal characteristic of an accountant, especially an auditor, that refers to both appearing and in fact being objective and impartial.

Independence

The report accompanying audited financial statements that explains briefly the auditor's responsibility and the extent of work performed. The report includes an opinion about whether the information contained in the financial s

Independent auditor's report

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

Integrity

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

Internal auditing

Standard-setting body responsible for the development of International Financial Reporting Standards (IFRS), permitted or required by more than 100 countries.

International Accounting Standards Boards (IASB)

Pronouncements of the International Accounting Standards Board that are considered to be a "principles-based" set of standards in that they establish broad rules as well as dictating specific treatments. many of the standards forming part of IFRS are known by the older name of International Accounting Standards (IAS)

International financial reporting standards (IFRS)

An organization or individual who has an ownership interest in the firm. For corporations, referred to as stockholder or shareholder.

Investor

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.

Managerial accounting

Personal characteristic of impartiality, including freedom from conflict of interest

Objectivity

Pronouncements of the Financial Accounting Standards Board that constitute generally accepted accounting principles.

Statements of Financial Accounting Standards (SFAS)

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. Also known as public accounting.

Auditing

A document distributed to shareholders and other interested parties that contains the financial statements, explanatory notes, and management's discussion and analysis of financial and operating factors that affected the firm together with the report of the external auditor's examination of the financial statements.

Annual Report

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

Bookkeeping

An organization composed of people from the public accounting profession, businesses, and the public that is responsible for the funding of and appointing members to the Financial Accounting Standards Board and the Governmental Accounting Standards Board.

Financial Accounting Foundation (FAF)

Cash receipts or disbursements of an entity.

Cash flow

Professional designation earned by passing a broad, four-part examination and meeting certain experience requirements. Examination topics include economics, corporate finance, information management, financial accounting and reporting, management reporting, decision analysis, and behavioral issues.

Certified Management Accountant (CMA)

A professional designation earned by fulfilling certain education and experience requirements, in addition to passing a comprehensive, four-part examination. Examination topics include financial accounting theory and practice, income tax accounting, managerial accounting, governmental and not-for-profit accounting, auditing, business law, and other aspects of the business environment.

Certified Public Accountant (CPA)

The job title of the person who is the chief accounting officer of an organization. The ____ is usually responsible for both the financial and managerial accounting functions.

Controller (sometimes referred to as comptroller)

A group authorized by the U.S. Congress to establish cost accounting standards for government contractors.

Cost Accounting Standards Board (CASB)

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

Cost accounting

An organization or individual who lends to the entity. Examples include suppliers who ship merchandise to the entity prior to receiving payment for their goods and banks that lend cash to the entity.

Creditor

The body responsible for establishing generally accepted accounting principles.

Financial Accounting Standards Board (FASB)

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

Entity

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.

Financial Accounting

Established in 2002 with authority to set and enforce auditing and ethics standards for public companies and their auditing firms; affiliated with the SEC

Public Company Accounting Oversight Board (PCAOB)

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

Public accounting

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

Securities and Exchange Commission (SEC)

Pronouncements of the Financial Accounting Standards Board (FASB) and its predecessors that constitute appropriate accounting for various transactions used for reporting financial position and results of operations to investors and creditors.

generally accepted accounting principles (GAAP)

Standards for audIting that are established by the Auditing Standards Board of the American Institute of Certified Public Accountants unless superseded or amended by the PCAOB.

generally accepted auditing standards (GAAS)