Chapter One Accounting Terms

A group of people or entities organized to buy and sell resources

Financial gain made by transforming resources into products or services that are desired by customers

Increase in value created by providing goods and services through resource transformation

The difference between revenues and expenses

Money or credit supplied to a business by investors and creditors

Provide financial resources in exchange for ownership interests in businesses

Lend financial resources to businesses

People or organizations that use financial information for decision making

Parties interested in the operations of a business

Branch of accounting focused on the business information needs of external users

Branch of accounting focused on the internal information needs of managers and others working within the business

Organizations established for motives other than making a profit

Businesses or other organizations for which financial statements are prepared

Reports used to communicate a company’s financial information to interested external parties

Record of summarized transaction data and a component of financial statement elements

Economic resource used to produce revenue that is expected to provide a future benefit to the business

Obligations of a business

A type of tradeable asset or security that equates to ownership in a company

Owners of a corporation

The interest in a corporation’s assets that is owned by the stockholders

Portion of stockholders’ equity that includes all earnings retained in the business since inception

Owners’ and creditors’ interests in a business’s assets

Algebraic relationship between a company’s assets and the claims on those assets

Economic occurrence that changes a company’s assets, liabilities, or equity

Business event that involves transferring something of value between two entities

A transaction that increases both an asset and a claim on assets

A transaction that decreases one asset and increases another asset

A transaction that decreases both an asset and a claim on assets

A transaction that happens when the creditors' claims increase while shareholders' claim decreases or vice versa

The economic benefit gained by providing goods or services to customers

An economic sacrifice that is incurred in the process of generating revenue

Transfer of wealth from a business to its owners

A practice that reports assets at the actual price paid for them when purchased regardless of estimated changes in market value

The set of all accounts used in a given accounting system, typically organized in financial statement order

Process of dividing up an organization’s assets and returning them to the resource providers

A business’s duty to protect and use the assets of the company for the benefit of the owners

Financial report of profitability

Time span covered by the financial statements

Statement that summarizes the transactions that affected the owners’ equity during the accounting period

Statement that shows how much earnings a company has accumulated and kept in the company since inception

Financial statement that reports a company’s assets and the corresponding claims on those assets as of a specific date

Financial statement that reports a company’s cash inflows and outflows for an accounting period

Ability to convert assets to cash quickly and meet short-term obligations

Characteristic of financial statements that means they are interrelated

The transfer of balances from the temporary accounts to the permanent account at the end of an accounting period

Accounts used to collect retained earnings data applicable to only the current accounting period

Balance sheet accounts that contain information carried forward from one accounting period to the next

A document companies publish to provide information, including financial statements, to stockholders