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Midterm

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Department
Accounting
Course
ACC 100
Professor
Else Grech
Semester
Summer

Description
Chapter 1 Organization – a collection of individuals pursuing the same goal or objective Sole proprietorship – a business with a single owner Economic entity concept – the assumption that a single identifiable unit must be accounted for in all situations Partnership – a business owned by two or more individuals and with the characteristic of unlimited liability Corporation – a form of entity organized under the laws of a particular province or the federal government; ownership evidenced by shares Share – a certificate that acts as evidence of ownership in a corporation Bond – a certificate that represents a corporation’s promise to repay a certain amount of money and interest in the future Non-business entity – organization operated for some purpose other than to earn a profit Liability – an obligation of a business Capital stock – indicates the owners contributions to a corporation Shareholder – someone who buys shares in a company Creditor – someone to whom a company or person has a debt Asset – a future economic benefit to an organization Revenue – inflows of assets resulting from the sale of products and services Expense – outflows of assets from the sale of goods and services Accounting – the process of identifying, measuring, and communicating economic information to various users Management accounting – the branch of accounting concerned with providing management with information to facility planning and control Financial accounting – the branch of accounting concerned with the preparation of financial statements for outsider use Owners equity – the owners claims on the assets of an equity Shareholders equity – The owners equity in a corporation Retained earnings – the part of owners equity that represents the income earned less dividends paid over the life of an entity Balance sheet – the financial statement that summarizes the assets, liabilities, and owners equity at a specific point in time Income statement – a statement that summarizes revenues and expense Dividends – a distribution of the net income of a business to its owners Statement of retained earnings – the statement that summarizes the income earned and dividends paid over the life of a business Cost principle – assets are recorded at the cost to acquire them Going concern – the assumption that an entity is not in the process of liquidation that it will continue indefinitely Monetary unit – the yardstick used to measure amounts in financial statements, the dollar Time period – artificial segment on the calendar, used as the basis for preparing financial statements Generally accepted accounting principles – the various methods, rules, practices, and other procedures that have evolved over time in response to the need to regulate the preparation of financial statements Securities and exchange commission – the U.S federal agency with ultimate authority to determine the rules in preparing statements for companies whose shares are sold to the public The financial accounting standards board – the group in the American private sector with authority to set accounting details International accounting standards board – the organization formed to develop worldwide accounting standards Chapter 2 Understandability – the quality of accounting information that makes it comprehensible to those willing to spend the necessary time Relevance – the capacity of information to make a difference in a decision Reliability – the quality that makes accounting information dependable in representing the events that it purports to represent Comparability – for accounting information, the quality that allows a user to analyze two or more companies and look for similarities and differences Depreciation – the process of allocating the cost of a long-term tangible asset over its useful life. Also termed amortization Consistency – for
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