Accounting Chapter 1
Certified Public Accountants (CPAs)
licensed professional accountants who serve the general public.
Audit
examination of a company's financial statements and records
Creditors
Any person or business to who a business owes money
Securities and Exchange Commission (SEC)
U.S. governmental agency that oversees the U.S. financial markets
Economic Entity Assumption
a business entity is an organization that stands apart as a separate economic unit
Sole proprietorship
a business with a single owner
Cost Principle
acquired assets and services should be recorded at their actual (historical) cost
Going Concern Assumption
assumes the entity will remain in operation for the foreseeable future
Corporation
business organized under state law that is a separate legal entity
Partnership
business with two or more owners and not organized as a corporation
Limited-Liability Company (LLC)
company in which member is only liable for his or her own actions
Managerial accounting
focuses on information for internal decision makers, such as the company's managers and employees
Accounting
information system that measures business activities, processes the information into reports, and communicates the results to decision makers
International Accounting Standards Board (IASB)
private organization that oversees the creation and governance of International Financial Reporting Standards (IFRS)
Financial Accounting Standards Board (FASB)
private organization that oversees the creation and governance of accounting standards in the U.S.
Financial accounting
provides information for external decision makers, such as outside investors, lenders, customers, and the federal government
Sarbanes-Oxley Act (SOX)
requires companies to review internal control and take responsibility for the accuracy and completeness of their financial reports
Monetary Unit Assumption
requires items on the financial statements to be measured in terms of a monetary unit
International Financial Reporting Standards (IFRS)
set of global accounting guidelines formulated by the International Accounting Standards Board (IASB)
Certified Management Accountants (CMAs)
specialize in accounting and financial management knowledge - typically work for a single company.
Generally Accepted Accounting Principles (GAAP)
the main U.S. accounting rule book and is currently created and governed by the FASB