01 Vocabulary

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01 Vocabulary
2012-06-13 15:00:51
Vocabulary 01

Kimmel: Financial Accounting, 6th Edition; Chapter 01
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  1. Accounting
    The information system that identifies, records, and communicates the economic events of an organization to interested users.
  2. Annual Report
    A report prepared by corporate management that presents financial information including financial statements, notes, a management discussion and analysis section, and an independent auditor's report.
  3. Assets
    Resources owned by a business.
  4. Auditor's Report
    A report prepared by an independent outside auditor stating the auditor's opinion as to the fairness of the presentation of the financial position and results of operations and their conformance with generally accepted accounting standards.
  5. Balance Sheet
    A financial statement that reports the assets and claims to those assets at a specific point in time.
  6. Basic Accounting Equation
    Assets = Liabilities + Stockholders' Equity
  7. Certified Public Accountant (CPA)
    An individual who has met certain criteria and is thus allowed to perform audits of corporations.
  8. Common Stock
    Term used to describe the total amount paid in by stockholders for the shares they purchase.
  9. Corporation
    A business organized as a separate legal entity having ownership divided into transferable shares of stock.
  10. Dividends
    Payments of cash from a corporation to its stockholders.
  11. Expenses
    The cost of assets consumed or services used in the process of generating revenues.
  12. Income Statement
    A financial statement that presents the revenues and expenses and resulting net income or net loss of a company for a specific period of time.
  13. Liabilities
    The debts and obligations of a business; represent the amounts owed to creditors.
  14. Management Discussion and Analysis (MD&A)
    A section of the annual report that presents management's views on the company's ability to pay near-term obligations, its ability to fund operations and expansion, and its results of operations.
  15. Net Income
    The amount by which revenues exceed expenses.
  16. Net Loss
    The amount by which expenses exceed revenues.
  17. Notes to the Financial Statements
    Notes that clarify information presented in the financial statements, as well as expand upon it where additional detail is necessary.
  18. Partnership
    A business owned by two or more persons associated as partners.
  19. Retained Earnings
    The amount of net income retained in the corporation.
  20. Revenue
    The increase in assets that result from the sale of a product or service in the normal course of business.
  21. Sarbanes-Oxley Act
    Regulations passed by Congress in 2002 to try to reduce unethical corporate behavior.
  22. Sole Proprietorship
    A business owned by one person.
  23. Statement of Cash Flows
    A financial statement that provides financial information about the cash receipts and cash payments of a business for a specific period of time.
  24. Stockholders' Equity
    The owners' claim to assets.