Accounting 101 Chp. 1 Terms
Sole proprietorship
A business entity owned by one person who is legally responsible for the debts and taxes of the business.
Partnership
A business entity owned by two or more people who are legally responsible for the debts and taxes of the business.
Economic entity
A business or orginization whose major purpose is to produce a profit for its owners.
Social entity
A nonprofit orginization, such as a city, public school, or public hospital.
Accounting system
A process designed to accumulate, classify, and summarize financial data.
Exposure draft
A proposed solution to a problem being considered by Financial Accounting Standards Board.
Corporation
A publicly or pirvately owned business entity that is separate from its owners and has a legal right to own property and do business in it's own name; stockholders are not responsible for the debts or taxes of the business.
Tax accounting
A service that involves tax compliance and tax planning.
Statements of Financial Accounting Standards
Accounting principles established by the Financial Accounting Standars Boards
Managerial accoutning
Accounting work carried on by an accountant employed by a single business in industry.
Governmental accounting
Accounting work performed for a federal, state, or local govermental unit
Generally accepted accounting principles (GAAP)
Accouting standards developed and applied by professional accountants.
Discussion memorandum
An explanation of topic under consideration by the Financial Accounting Standards Board.
Certified public accoutnant (CPA)
An independant accountant who provides accoutning services to the public for a fee.
Auditor's report
An independant accoutnant's review of a firm's financial statements.
Entity
Anything having its own sperate identity, such as an individual, a town, a university, or a business.
Stock
Certificates that represent ownership of a corporation.
Public accountants
Members of a firms that perform accounting service for other companies.
Creditor
One whom money is owed.
Financial Statements
Periodic reports of a firm's financial position or operation results.
Management advisory services
Services designed to help clients improve their information systems or their business performance.
Stockholders
The owners of a corporation; also called shareholders
Accounting
The process by which financial information about a business is recorded, classified, summerized, interpreted, and communicated to owners, managers, and other interested parties.
Auditing
The review of finacial statements to assess their fairness and adherence to generally accepted accounting principles
International accounting
The study of accounting principles used by different countries.
Seperate entity assumption
the concept of keeping a firm's financial records seperate from the owner's personal financial records