acct ex 1
Chart
A list of all ledger identification accounts and identification numbers, not including account balances.
General ledger
A collection of accounts and account balances is referred to as a
Expense Recognition Principle
A company records the expenses it incurred to generate the revenue reported
Full Discolsure principle
A company reports the details behind financial statements that would impact users decisions.
SEC
A government agency that enforces the proper use of GAAP
FASB
A group that sets accounting principles in the united states
Public accountants
Accounting professionals who provide services to many clients
Double entry accounting
Demands the accounting equation to remain in balance.
Internal Users
Directly manages the organization. Creates internal reports are designed for the needs of the CEO
External Users
Does not directly run the organization and have limited access to its accounting information. General purpose financial statements.
Audit
Examines weather financial statements are prepared using GAAP it does not ensure absolute accuracy of the statements
Journal
Has a complete record of every transaction recorded
Ethics
Principles that determine weather an action is right or wrong
Sarbanes-Oxley Act
Requires documentation and verification of internal controls and increases emphasis on internal control effectiveness
Dodd-Frank Act
Requires the SEC to pay whistleblowers
Revenue recognition principle
Revenue is recognized when goods or services are provided to customers and at the amount expected to be received from the customer.
Fraud Triangle
Three factors push a person to commit fraud: opportunity, pressure, and rationalization.
GAAP (Generally Accepted Accounting Principles)
a collection of accounting rules set by the FASB
Measurement principle (cost principle)
accounting information is based on actual cost. If cash is given for a service, its cost is measured by the cash paid.
Account
contains a record of decreases and increases in a specific revenue, expense, asset, liability, or equity.
chart of accounts
is a list of all ledger accounts and has an identification number assigned to each account.
Accounting Cycle
steps in preparing financial statements
perpetual inventory system
updates accounting records for each purchase and sale of inventory
periodic inventory system
updates the accounting records for merchandise transactions only at the end of a period