Chapter 1: Introduction to Accounting & Business

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Chapter 1: Introduction to Accounting & Business
Accounting 2: Financial/Managerial Accounting
Olivo
OBJECTIVE 1
Describe the nature of a business, the role of accounting, and ethics in business.
KEY TERMS
Accounting
Business
Certified Public Accountant (CPA)
Ethics
Financial Accounting
General-Purpose Financial Statements
Management (Managerial) Accounting
Manufacturing Business
Merchandising Business
Private Accounting
Profit
Public Accounting
Service Business
OBJECTIVE 2
Summarize the development of accounting principles and relate them to practice.
KEY TERMS
Business Entity Concept
Corporation
Cost Concept
Financial Accounting Standards Board (FASB)
Generally Accepted Accounting Principles (GAAP)
International Accounting Standards Board (IASB)
Limited Liability Company (LLC)
Objectivity Concept
Partnership
Proprietorship
Securities and Exchange Commission
Unit of Measure Concept
OBJECTIVE 3
STATE THE ACCOUNTING EQUATION AND DEFINE EACH ELEMENT OF THE EQUATION.
KEY TERMS
Accounting Equation
Liabilities
Assets
Owner’s Equity (Stockholder’s Equity)
OBJECTIVE 4
Describe and illustrate how business transactions can be recorded in terms of the resulting
changes in the basic elements of the accounting equation.
KEY TERMS
Account Payable
Account Receivable
Business Transaction
Expenses
Fees Earned
Stockholder’s Equity
Interest Revenue
Prepaid Expenses
Rent Revenue
Revenue
Sales
OBJECTIVE 5
Describe the financial statements of a corporation and explain how they interrelate.
KEY TERMS
Account Form
Balance Sheet
Earnings
Financial Statements
Income Statement
Matching Concept
Net Income (or Net Profit)
Net Loss
Statement of Cash Flows
Retained earnings statement
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