Financial Accounting 10th Edition CH. 1
1. Accounting: An information system and the language of business.
2. Financial Accounting: provides information for decision makers outside of the
entity.
3. Managerial Accounting: provides information for managers within the company
or entity.
4. Proprietorship: single owner for a company
5. Partnership: two or more parties owning the same company
6. Limited-Liability Company LLC: the business, NOT the owner, is liable for the
company's debts. Contains one or many owners called members.
7. Corporation: a business owned by the stockholders/shareholders who own
stock representing shares of ownership. Examples are Ford, Apple, The Gap.
8. GAAP: Generally Accepted Accounting Principles, created by the Financial
Accounting Standards Board
9. Entity Assumption: separation from the owner's personal assets and
belongings from the company's assets and belongings.
10. Going-concern assumption: a business should stay in business long enough
to convert its inventories and receivables to cash and pay off its obligations in the
ordinary course of business and to continue this process of operating into the
future. 11. Historical Cost Principal: assets should be recorded at their actual
cost, measured on the date of purchase as the amount of cash paid plus the
dollar value of all non cash consideration
12. Fair value: the amount a business could sell the asset for or the amount the
business could pay to settle the liability
1. Accounting: An information system and the language of business.
2. Financial Accounting: provides information for decision makers outside of the
entity.
3. Managerial Accounting: provides information for managers within the company
or entity.
4. Proprietorship: single owner for a company
5. Partnership: two or more parties owning the same company
6. Limited-Liability Company LLC: the business, NOT the owner, is liable for the
company's debts. Contains one or many owners called members.
7. Corporation: a business owned by the stockholders/shareholders who own
stock representing shares of ownership. Examples are Ford, Apple, The Gap.
8. GAAP: Generally Accepted Accounting Principles, created by the Financial
Accounting Standards Board
9. Entity Assumption: separation from the owner's personal assets and
belongings from the company's assets and belongings.
10. Going-concern assumption: a business should stay in business long enough
to convert its inventories and receivables to cash and pay off its obligations in the
ordinary course of business and to continue this process of operating into the
future. 11. Historical Cost Principal: assets should be recorded at their actual
cost, measured on the date of purchase as the amount of cash paid plus the
dollar value of all non cash consideration
12. Fair value: the amount a business could sell the asset for or the amount the
business could pay to settle the liability
