KEY TERMS

accountability Responsibility

accounting and information systems function The functional area of business responsible for providing information to the other areas to enable them to do their jobs and for reporting the results to interested parties

accounting system A system used to identify, analyze, measure, record, summarize, and communicate relevant economic information to interested parties

American Institute of Certified Public Accountants (AICPA) The professional organization for all certified public accountants that is actively involved in the development of accounting standards and sets auditing standards for public accounting firms

auditing The process of examining a company's financial records by a CPA to ascertain whether they comply with generally accepted accounting principles

bond A certificate that represents the debt of a company

business The exchange of goods, services, and money on an arm's-length basis, that results in mutual benefit or profit for both parties involved

business entity concept The concept that requires that an accounting system reflect information that identifies and summarizes only those economic events that pertain to a particular entity

certified public accountant (CPA) An accountant who can attest to the presentation of financial information of a publicly held company

chief financial officer (CFO) A member of top management to whom the controller, treasurer, and internal auditor report

controller The company's chief accounting officer

corporation A business entity that is legally separate and distinct from its owners

dividends A distribution of corporate profits

double taxation A situation in which the profits of corporations are taxed twice— once at the business level and, again, at the stockholder level if the profits are distributed as dividends

external stakeholders Parties outside an organization who have an interest, or stake, in the organization, such as stockholders, creditors, suppliers, customers, and the general public

finance function The function responsible for managing the financial resources of the company

Financial Accounting Standards Board (FASB) The standard-setting body responsible for developing accounting standards for reporting to external financial statement users

fiscal year A year-long period that encompasses a natural business cycle and allows a business to prepare its required accounting information during its slowest business period

generally accepted accounting principles (GAAP) The Statements of Financial Accounting Standards, bulletins, opinions, and principles that direct acceptable accounting practice

going concern concept The concept that assumes that, absent information to the contrary, the business will continue into the foreseeable future

human resources management function The function responsible for ensuring that capable employees are given the opportunity to succeed in the workplace

initial issue The original sale of stocks or bonds to investors

internal auditor A private accountant responsible for assessing the company's internal control system

internal stakeholders Parties inside the organization who have an interest, or stake, in the organization, such as employees and management

International Accounting Standards Committee (IASC) The group that is leading the way toward standardization of international accounting for external reporting

limited liability The condition which indicates that investors are not personally liable for the debts of the business

limited liability partnership (LLP) A partnership in which the individual partners are responsible only for their own acts and the acts of those individuals under their control

limited partnership A partnership composed of one or more general partners and one or more limited partners

management accountant An individual who provides information to internal stakeholders

manufacturing firm A company that produces products from raw materials for sale to consumers

marketing function The function responsible for determining the wants and needs of consumers and devising a system for distributing the goods and services they demand

merchandising company A company that obtains and distributes goods to consumers

monetary unit concept The concept that asserts that money is the common measurement unit of economic activity

mutual agency A situation in which each partner has the power to act for all other partners

mutual fund An investment company that pools the money from many individual investors and invests it for a common goal

partnership A business owned by two or more individuals who agree to share both the risks and rewards of business

partnership agreement An agreement that stipulates the rights and obligations of each partner and describes how to divide the partnership profits

periodicity concept The concept that requires that the profits of the business be determined at regular intervals throughout the life of the business

private accounting Accounting in the individual business unit

production and operations management function The function that is responsible for planning, organizing, directing, and controlling the operations of business

public accounting A variety of accounting services provided by an accounting firm for many different types of businesses

rate of return A return on investment stated as a percentage of the investment

return of investment The return of the amount invested

return on investment The return, or profit, received on the owner's investment

reward Possible future benefits of an action

risk Possible future sacrifices of an action

S corporation A small business corporation owned by no more than 35 individuals in which the profits earned by the business are not subject to income tax at the corporate level

secondary market An exchange where bonds and stocks are bought and sold after the initial issue

service firm A company that provides senders to customers

share of stock A certificate that represents ownership in a corporation

sole proprietorship A business owned by one person whose personal possessions are at risk

Statements of Financial Accounting Standards (SFAS) Pronouncements of the Financial Accounting Standards Board

stock exchanges Exchanges for buying and selling stocks; for example, New York, American, and various regional exchanges

treasurer The individual responsible for investing the company's money and securing financing from creditors

Uniform Partnership Act The act that governs the rights and obligations of partners when a partnership agreement does not exist

Date: 2015-01-02; view: 1457