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- Provide services rather than products to customers.
- Delta Air Lines (transportation service)
- The Walt Disney Company (Entertainment Service)
- Sell products they purchase from other businesses to customers
- Wal-mart (general merchandise)
- Amazon.com ( Internet books, music, videos)
- Change basic inputs into products that are sold to customers.
- Ford Motor Co. (Cars, trucks, vans)
- Dell Inc. (personal computers)
provides reports to users about the economic activities and condition of a business. "language of business"
Provides internal users with information
Provides external users with information.
Generallly Accepted Accounting Principles. What accountants follow when making financial statements.
Financial Accounting Standards Board. Has the primary responsibility for developing accounting principles. The FASB publishes Statements of financial Accounting Standards as well as interpretations of theses standards.
Securities and Exchange Commission. An agency of the U.S. government, has authority over the accounting and financial disclosures for companies whose shares of ownership are traded and sold to the public.
International Accounting Standards Board. The IASB issues International Financial Reporting Standards. Significant differences currently exist between FASB and IASB accounting principles.
Business Entity Concept
Limits the economic data in an accounting system to data related directly to the activitiesof the business. In other words the business is viewed as an entity separate from its owners, creditors, or other businesses.
- is owned by one individual
- Easy and cheap to organixe
- Resources are limited to those of the owner
- Used by small businesses
Is owned by two or more individuals
The Accounting Equation
Assets = Liabilities + Owners Equity
stock issued to owners (stockholders), such as Chris Clark, is referred to as capital stock.
- The owners equity in a corporation.
- Assets = Stockholders Equity
- Cash = Capital Stock
Amounts are initially recorded in the accounting records at their cost or purchase price.
requires that the amounts recorded in the accounting records be based on objective evidence.
Unit measure concept
Requires that economic data be recorded in dollars. Money is a common unit of measurement for reporting financial data and reports.
The resources owned by a business.
The rights of creditors are the debts of the business.
The rights of the owners .
A claim against the customer. An account receivable is an asset and the revenue is earned and recorded as if cash had been received. When customers pay their accounts, cash increases and AR decreases.
Spent cash or used up other assets in earning revenue. Assets used in the process of earning revenue are called....