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RSM219H1 (136)
Chapter 4

Chapter 4 Notes

4 Pages

Rotman Commerce
Course Code
Chris Bovaird

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MGTA04 Definitions Chapter 4 Accounting: a comprehensive system for collecting, analyzing, and communicating financial information Bookkeeping: recording accounting transactions Accounting Information System (AIS): An organized procedure for identifying, measuring, recording and retaining financial information so that it can be used in accounting statements and management reports Controller: the individual who manages all the firm’s accounting activities Financial accounting system: the process whereby interested groups are kept informed about the financial condition of a firm Managerial (management) accounting: internal procedures that alert managers to problems and aid them in planning and decision making Chartered accountant (CA): an individual who has met certain experience and education requirements and has passed a licensing examination; acts as an outside accountant for other firms Certified general accountant (CGA): an individual who has completed an education program and passed a national exam; works in private industry or a CGA firm Certified management accountant (CMA): an individual who has completed a university degree, passed a national examination, and completed a strategic leadership program; works in industry and focuses on internal management accounting Audit: an accountant’s examination of a company’s financial records to determine if it used proper procedures to prepare its financial reports Forensic accountant: an accountant who tracks down hidden funds in business firms, usually as part of a criminal investigation Generally accepted accounting principles (GAAP): standard rules and methods used by accountants in preparing financial reports Management consulting services: specialized accounting services to help managers resolve a variety of problems in finance, production scheduling, and other areas Private accountant: an accountant hired as a salaried employee to deal with a company’s day- to-day accounting needs Asset: anything of economic value owned by a firm or individual Liability: any debt owed by a firm or individual to others Owners’ equity: any positive difference between a firm’s assets and its liabilities; what would remain for a firm’s owners if the company were liquidated, all its assets were sold, and all its debts were paid Double-entry accounting system: a bookkeeping system, developed in the fifteenth century and still in use, that requires every transaction to be entered in two ways – how it affects assets and how it affects liabilities and owners’ equity – so that the accounting equation is always in balance Financial statement: any of several types of broad reports regarding a company’s financial status; most often used in reference to balance sheets, income statements, and/or statements of cash flows Balance sheet: a type of financial statement that summarizes a firm’s financial position on a particular date in terms of its assets, liabilities, and owners’ equity Current assets: cash and other assets that can be converted into cash within a year Liquidity: the ease and speed with which an asset can be converted to cash; cash is said to be perfectly liquid Accounts receivable: amounts due to the firm from customers who have purchased goods or services on credit; a form of current asset Merchandise inventory: the cost of merchandise that has been acquired for sale to customers but is still
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