Accounting Chapter 1

Front 1

business

Back 1

an organization in which basic resources, such as materials or labor are assembled and processed to provide goods or services to customers

Front 2

profit

Back 2

the difference between the amounts received versus the amounts paid

Front 3

manufacturing businesses

Back 3

change basic inputs into products that are sold to individual customers

Front 4

merchandising businesses

Back 4

sell products to customers

Front 5

service businesses

Back 5

provide services rather than products to customers

Front 6

proprietorship

Back 6

business owned by one person

Front 7

partnership

Back 7

business owned by two or more individuals

Front 8

corporation

Back 8

business organized under state or federal statutes as a seperate legal taxable entity

Front 9

limited liability corporation

Back 9

business that acts like a corporation but can be taxed like a partnership

Front 10

business strategy

Back 10

an integrated set of plans and actions designed to enable the business to gain an advantage over its competitors, and in doing so, to maximize profits

Front 11

low-cost strategy

Back 11

a business strategy that designs and produces products or services of acceptable quality at a cost lower than that of its competitors

Front 12

differentiation strategy

Back 12

a business strategy that designs and produces products or services that possess unique attributes or characteristics for which customers will pay a premium price

Front 13

value-chain

Back 13

the way a business adds value for its customers by prcessing inputs into a product or service
inputs>business processes>products or services>customer value

Front 14

business stakeholder

Back 14

person or entity having an interest in the economic performance of the business

Front 15

managers

Back 15

individuals who the owners have authorized to operate the business

Front 16

employees

Back 16

provide services to the business in exchange for a paycheck

Front 17

creditors

Back 17

invest resources in the business by extending credit

Front 18

goverments

Back 18

collect taxes from companies

Front 19

accounting

Back 19

an information system that provides reports to stakeholders about the economic activities and condition of a business

Front 20

ethics

Back 20

moral priniciples that guide the conduct of individuals

Front 21

private accounting

Back 21

accountants employed by a business firm

Front 22

public accounting

Back 22

accountants who provide servcies on a fee basis

Front 23

controller

Back 23

the chief accoutant in a business

Front 24

Certified Public Accountant(CPA)

Back 24

public accountants who have met a state's education, experience and examination requirments

Front 25

financial accounting

Back 25

accounting concerned with the recording and reporting of economic data and activies for a business

Front 26

managerial accounting

Back 26

uses both financial accounting and estimated data to aid management in running day-to-day operations and in planning future operations

Front 27

business entity concept

Back 27

limits the economic data in the accounting system to data related directly to the activities of the business

Front 28

cost concept

Back 28

basis for entering the exchange price, or cost of something

Front 29

objectivity concept

Back 29

requires that the accounting records and reports be based upon objective evidence

Front 30

unit of measure concept

Back 30

requires that all economic data be recorded in dollars

Front 31

assets

Back 31

resources owned by a business

Front 32

liabilities

Back 32

rights of creditors represent debts of the business

Front 33

owners' equity

Back 33

rights of the owners

Front 34

accounting equation

Back 34

Assets = Liabilites + Owners' Equity

Front 35

business transaction

Back 35

an economic event that directly changes an entity's financial condition or directly affects it

Front 36

capital stock

Back 36

stock issued to owners

Front 37

prepaid expenses

Back 37

items such as supplies that will be used in the future

Front 38

revenue

Back 38

received money for rendering services or goods to a customer

Front 39

retained earnings

Back 39

owners' equity created by the business operations

Front 40

fees earned

Back 40

revenue from providing services

Front 41

expenses

Back 41

the amount used in the process of earning revenue

Front 42

income statement

Back 42

summary of the revenue and expenses for a specific period of time

Front 43

retained earnings statement

Back 43

summary of the changes in the earnings retained in the corporation for a specific period of time

Front 44

balance sheet

Back 44

a list of the assets, liabilities, and owners' equity as of a specific date, usually at the close of the last day of a month or a year

Front 45

statement of cash flows

Back 45

a summary of cash receipts and cash payments for a specifc period of time

Front 46

net income

Back 46

the excess of the revenue over the expenses

Front 47

net loss

Back 47

the excess of the expenses over the revenue

Front 48

ratio of liabilities to stockholders' equity

Back 48

=total liabilites/total stockholders' equity