Unit I Flashcards
Chapter 1
#1
Review
Accounting
The information system that
measures business activities,
processes the information into
reports, and communicates the
results to decision makers.
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#2
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Accounting equation
The basic tool of accounting, measuring the
resources of the business (what the business
owns or has control of) and the claims to
those resources (what the business owes to
creditors and to the owners).
Assets = Liabilities + Equity
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#3
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Accounts payable
A short-term liability that will be paid in
the future.
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#4
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Accounts receivable
The right to receive cash in the
future from customers for goods
sold or for services performed.
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#5
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Assets
Economic resources that are
expected to benefit the business in
the future. Something the business
owns or has control of.
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#6
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Audit
An examination of a company’s
financial statements and records.
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#7
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Balance Sheet
Reports on the assets, liabilities, and
owner’s equity of the business as of
a specific date.
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#8
Certified Public Accountants (CPAs)
Review
Licensed professional accountants
who serve the general public.
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#9
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Equity
The owners’ claims to the assets of
the business.
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#10
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Expenses
The cost of selling goods or services
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#11
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Financial Accounting
The field of accounting that focuses
on providing information for
external decision makers.
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#12
Review
Financial Statements
Business documents that are used
to communicate information
needed to make business decisions.
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#13
Generally Accepted Accounting Principles
(GAAP)
Review
Accounting Guidelines, currently
formulated by the Financial
Accounting Standards Board.
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#14
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Income statement
Reports the net income or net loss
of the business for a specific period.
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#15
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Net income
The result of operations that occurs
with total revenues are greater than
total expenses.
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#16
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Net loss
The result of operations that occurs
when total expenses are greater
than total revenues.
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#17
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Owner’s capital
Owner contributions to a business.
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#18
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Owner’s withdrawals
Payments of equity to the owner.
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#19
Security and Exchange Commission (SEC)
Review
U.S. governmental agency that
oversees the U.S. financial markets.
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#20
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Statement of Cash Flows
Reports on a business’s cash
receipts
and cash payments for a
specific period.
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#21
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Statement of Owner’s Equity
Shows the changes in the owner’s
capital account for a specific period.
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#22
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Transaction
An event that affects the financial
position of the business and
can be measured with faithful
representation.
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Reference
Miller-Nobles, T., Mattison, B., & Matsumura, E. M. (2016). Horngren’s
accounting (11th ed.). Upper Saddle River, NJ: Pearson.
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