202358
Description
Flashcards by lmhatchard, updated more than 1 year ago
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Created by lmhatchard
over 10 years ago
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| Question | Answer |
| accounting | a system of analyzing, recording, and summarizing the results of a business's activities and then reporting the results to decision makers. |
| managerial accounting reports | include detailed financial plans and continually updated reports bout the operating performance of the company. |
| financial statements | accounting reports that summarize the financial results of business and financing activities. |
| creditors | anyone to whom money is owed |
| banks | use financial statements to evaluate the risk that they will not be repaid for the money they've loaned to a company. |
| suppliers | check the business's credit standing and may also ask for its financial statements before entering into significant business relationships. |
| shareholders | rely on financial statements to evaluate whether the company is financially secure and likely to be a profitable investment. |
| the basic accounting equation | Resources owned by the company = resources owed to creditors + to shareholders. Assets = Liabilities + Shareholder's Equity |
| separate entity assumption | the financial reports of a business are assumed to include the results of only that business's activities |
| account payable | the amount owed is called an account payable because purchases made using credit are said to be "on account". |
| note payable | name is used because banks require borrowers to sign a legal document called a note, which describes details about the company's promise to repay the bank. |
| wages payable | wages owed to employees. |
| taxes payable | taxes owed to government. |
| asset | an economic resource presently controlled by the company; it has measurable value and is expected to benefit the company by producing cash inflows or reducing cash outflows in the future. |
| liability | a measurable amount that the company owes to creditors. |
| shareholder's equity | represents the owners' claims on the business. |
| net income | profit revenues - expenses |
| contributed capital | paid in by shareholders |
| retained earnings | earned by the company |
| dividends | profit distributed |
| financial statements | 1) income statement 2) statement of retained earnings 3) balance sheet 4) statement of cash flows |
| income statement | reports the amount of revenues less expenses for a period of time. |
| unit of measure assumption | results of business activities should be reported in an appropriate monetary unit, which in Canada is the Canadian dollar. |
| accounts | accumulate and report the effects of each different business activity. |
| statement of retained earnings | reports he way that net income and the distribution of dividends affected the financial position of the company during the period. |
| balance sheet | reports the amount of assets, liabilities, and shareholder's equity of a business at a point in time. |
| any account name containing receivable is an... | asset |
| any account name containing payable is a... | liability |
| statement of cash flows | reports the operating, investing, and financing activities that caused increases and decreases in cash during the period. |
| generally accepted accounting principles (GAAP) | rules of accounting approved by the Canadian Institute of Chartered Accountant for use in Canada. |
| International Financial Reporting Standards (IFRS) | rules of accounting created by the International Accounting Standards Board (ASB) for international use. |
| publicly accountable profit-oriented enterprises | have shares traded in a public market or hold assets in a fiduciary capacity for someone else and are required to use IFRS |
| private enterprise | do not have publicly traded shares in an open market nor do they hold assets in a fiduciary capacity for someone else; have the option to use IFRS or ASPE |
| Accounting Standards for Private Enterprises (ASPE) | rules of accounting that address issues that are more relevant in a private enterprise environment and therefore can be used by private enterprises only. |
| Canadian Auditing Standards (CAS) | provide auditors with up-to-date tools and required procedures in order to carry out high quality financial statement audits in today's complex business environment. |
| Sarbanes-Oxley Act (SOX) | created by the US Congress after the fall of Enron due to accounting fraud; includes regulating on many topics, including internal control systems and certification of executives. |
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