Download Accounting Terms and Concepts: A Comprehensive Guide and more Quizzes Computer Aided Design (CAD) in PDF only on Docsity! TERM 1 Accounting Equation DEFINITION 1 Equation that shows a company's resources equal creditors' and owners' claims to those resources. Assets = liabilities and stockholders' equity TERM 2 Assets DEFINITION 2 Resources own by a company TERM 3 Auditors DEFINITION 3 Trained individuals hired by a company as an independent part to express a professional opinion of the accuracy of the company's financial position of the company on a particular date. TERM 4 Balance Sheet DEFINITION 4 A financial statement that presents the financial position of the company on a particular date TERM 5 Comparability DEFINITION 5 The ability of users to see similarities and differences between two different business activities. TERM 6 Consistency DEFINITION 6 The use of similar accounting procedures either over time for the same company, or across companies at the same point in time. TERM 7 Corporation DEFINITION 7 An entity that is legally separate from its owners. TERM 8 Cost effectiveness DEFINITION 8 Financial accounting information is provided only when the benefits of doing so exceed the costs. TERM 9 Decision Usefulness DEFINITION 9 The ability of information to be useful in decision making. TERM 10 Dividends DEFINITION 10 Cash payments to stockholders TERM 21 Liabilities DEFINITION 21 Amounts owed to creditors. TERM 22 Materiality DEFINITION 22 The impact of financial accounting information on investors' and creditors' decisions. TERM 23 Monetary Unit Assumption DEFINITION 23 A unit or scale of measurement can be used to measure financial statement elements. TERM 24 Net Income DEFINITION 24 Difference between revenues and expenses. TERM 25 Operating Activities DEFINITION 25 Transactions involving the primary operations of the company, such as providing products and services to customers and the associated costs of doing so, like utilities, taxes, advertising, wages, rent, and maintenance. TERM 26 Partnership DEFINITION 26 Business owned by two or more persons. TERM 27 Periodicity assumption DEFINITION 27 The economic life of an enterprise (presumed to be indefinite) can be divided into artificial time periods for financial reporting TERM 28 Relevance DEFINITION 28 Accounting information that possesses confirmatory value, predictive value, and/or timeliness. TERM 29 Retained earnings DEFINITION 29 Cumulative amount of net income earned over the life of the company that has not been distributed to stockholders as dividends. TERM 30 Revenues DEFINITION 30 Amounts earned from selling products or services to customers. TERM 31 Sole Proprietorship DEFINITION 31 A business owned by a single person TERM 32 Statement of Cash flows DEFINITION 32 A financial statement that measures activities involving cash receipts and cash payments over an interval of time. TERM 33 Statement of Stockholders' Equity DEFINITION 33 A financial statement that summarizes the changes in stockholders' equity over an interval of time. TERM 34 Stockholder's Equity DEFINITION 34 Stockholders', or ownders', claims to resources, which equal the difference between total assets and total liabilities. TERM 35 Understandability DEFINITION 35 Users must understand the information within the context of the decision they are making.
