ACCOUNTING Accounting is a system that collects and processes (analyzes, measures, and records)
financial information about an organization and reports that information to decision
ACCOUNTING ENTITY An Accounting Entity is the organization for which financial data are to be
collected. Page 5
ACCOUNTING PERIOD The Accounting Period is the time period covered by the financial statements.
ACCOUNTING STANDARDS BOARD (AcSB) The Accounting Standards Board (AcSB) is the private-
sector body given the primary responsibility to work out the detailed r
ules that become accepted accounting standards. Page 19
AUDIT An Audit is an examination of the financial reports to ensure that they represent
what they claim and conform with International Financial Reporting Standards. Page 22
AUDIT REPORT (REPORT OF INDEPENDENT AUDITORS) The Audit Report (Report of Independent
Auditors) describes the auditors' opinion of the fairness of the financial
statement presentations and the evidence gathered to support that opinion.
BASIC ACCOUNTING EQUATION Assets = Liabilities + Shareholders' Equity Page 6
INCOME STATEMENT The Income Statement reports the revenues less the expenses of the accounting
period. Page 9
INTERNATIONAL ACCOUNTING STANDARDS BOARD The International Accounting Standards Board is
an independent standard-setting board that is responsible for the
development and publication of International Financial Reporting
Standards. Page 20
INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) International Financial Reporting
Standards (IFRS) are guidelines for the measurement rules used to
develop the information in financial statements.Page 19
NOTES (FOOTNOTES) Notes (Footnotes) provide supplemental information about the financial
condition of a company, without which the financial statements cannot
be fully understood. Page 17
ONTARIO SECURITIES COMMISSION (OSC) The Ontario Securities Commission (OSC) is the most
influential Canadian regulator of the flow of financial information
provided by publicly traded companies in Canada. Page 19 REPORT TO MANAGEMENT (MANAGEMENT CERTIFICATION) The Report to Management
(Management Certification) indicates management's primary
responsibility for financial statement information and the steps to
ensure the accuracy of the company's records. Page 21
RETAINED EARNINGS Retained Earnings reflect the profits that have been earned since the creation of
the company but not distributed yet to shareholders as dividends or refers to
the accumulated earnings of a company that are not distributed to the owners
and are reinvested in the business Page 12
SECURITIES AND EXCHANGE COMMISSION (SEC)The Securities and Exchange Commission is the U.S.
government agency that determines the financial statements that public
companies must provide to shareholders and the measurement rules that they
must use in producing those statements. Page 19
STATEMENT OF CASH FLOWS The Statement of Cash Flows reports cash inflows and outflows that are
related to operating, investing, and financing activities during the accounting
period. Page 13
STATEMENT OF CHANGES IN EQUITY The Statement of Changes in Equity reports all changes to
shareholders' equity during the accounting period. Page 12
STATEMENT OF COMPREHENSIVE INCOME The Statement of Comprehensive Income reports the
change in shareholders' equity, during a period, from business activities,
excluding exchanges with shareholders. Page 9
STATEMENT OF FINANCIAL POSITION (BALANCE SHEET) A Statement of Financial position (Balance
sheet) reports the financial position (assets, liabilities, and shareholders' equity)
ACCOUNT a standardized format that organizations use to accumulate the monetary
effects of transactions on each financial statement item.
ASSETS economic resources controlled by an entity as a result of past
transactions or events and from which future economic benefits
may be obtained.
CONTINUITY-ASSUMPTION states that businesses are assumed to continue to operate
into the foreseeable future.
COST-PRINCIPLE requires assets to be recorded at the historical cash-equivalent
cost, which is cash paid plus the current monetary value of all non- cash considerations also given in the exchange, on the date of the
CREDIT the right side of an account.
CURRENT-ASSETS assets that will be used or turned into cash, normally within one
year. Inventory is always considered to be a current asset,
regardless of the time needed to produce and sell it.
CURRENT-LIABILITIES ( short-term ) obligations that will be paid in cash (or other current
assets) or satisfied by providing service within the normal
operating cycle or one year, whichever is longer
DEBIT the left side of an account.
JOURNAL-ENTRY provides a summary of a transaction and its effects on various
accounts, using the double-entry bookkeeping
LIABILITIES present debts or obligations of the entity that result from past
transactions, which will be paid with assets or services. or are
debts or obligations arising from past transactions that will be paid
with assets or services
NON-CURRENT-ASSETS considered to be long term because they will be used or t
urned into cash over a period longer than the next year.
NON-CURRENT-LIABILITIES a company's debts that have maturities extending beyond
one year from the date of the statement of financial position
or are all of the entity's obligations not classified as current
PRIMARY-OBJECTIVE-OF-EXTERNAL-FINANCIAL-REPORTING provide useful economic
information about a business to help external parties make