ACC 100 Chapter Notes - Chapter 1-6: Statement Of Changes In Equity, Retained Earnings, Current Asset

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Published on 21 Apr 2011
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CHAPTER 1
Key words Definitions
Business All activities necessary to provide the members of an economic
system with goods and service
Business entityOrganization operated to earn a profit
Economic entity
conceptThe assumption that a single, identifiable unit must be accounted
for in all situations
Sole proprietorship:Form of a organization with a single owner
Partnership:A business owned by two or more individuals; organization form
often used by accounting firms and law firms
Corporation:A form of entity organized under the laws of a particular
jurisdiction; ownership evidenced by shares
A share:A certificate that acts as ownership in a corporation
Bond:A certificate that represents a corporations 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
Liabilityan obligation of a business
Capital stock Indicates the owners contributions to a corporation
Shareholderone of the owners of a corporation
AssetFuture economic benefit
RevenueAn inflow of assets resulting to the sales of goods and services
Expense An outflow of assets resulting to the sales of goods and services
Accounting Process of identifying, measuring, and communicating economic
information to various users
Management
accounting The branch of accounting concerned with providing management
Financial
Accounting The branch of accounting concerned with communication with
outsiders through financial statements
Owners equitythe owners claims to the assets of an entity
Shareholders
equitythe owners’ equity of a corporation
Retained earnings the part of owners equity that represents the income earned less
dividends paid over the life of an entity
Balance sheetthe financial statement that summarizes the assets, liabilities, and
owners equity at a specific point in time
Income statement A statement that summarizes revenues and expenses for a period
of time
Dividendsa distribution of the net income of a business to its shareholders
Statement of
retained earningsthe statement that summarizes the income earned and dividends
paid over the life of a business
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Cost principle assets are recorded and reported at the cost paid to acquire them
Going concernthe assumption that an entity is not in the process of liquidation
and that it will continue indefinitely
GAAPthe various methods, rules, practices, and other procedures that
have evolved over time in response to the need to regulate the
preparation of financial statements
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