WGU C213 Accounting Fundamentals Final Exam Study Guide |
Complete Definitions & Key Concepts
• Accounting
A system of providing "quantitative information, primarily financial in nature, about economic
entities that is intended to be useful in making economic decisions."
============================
• American Institute of Certified Public Accountants (AICPA)
The professional organization of certified public accountants in the United States
============================
• Balance Sheet
Document which reports the resources of a company (the assets), the company's obligations
(the liabilities), and the owners' equity, which represents how much money has been invested in
the company by its owners
============================
• Bookkeeping
The preservation of a systematic, quantitative record of an activity
============================
• Certified Public Accountant
A person who has taken a minimum number of college-level accounting classes, has passed the
dreaded CPA exam, and has met other requirements set by his or her state
============================
• Financial Accounting
The name given to accounting information provided for and used by external users
============================
• Financial Accounting Standards Board (FASB)
Governmental body that sets accounting standards in the United States.
============================
• Financial Statements
The three primary financial information documents: the balance sheet, income statement, and
statement of cash flows
============================
• Income Statement
This document reports the amount of net income earned by a company during a period, with
annual and quarterly income statements being the most common
============================
• Internal Revenue Service (IRS)
The government agency responsible for tax collection and tax law enforcement
============================
• International Accounting Standards Board (IASB)
An independent, international body formed to develop worldwide accounting standards
============================
• International Financial Reporting Standards (IFRS)
The accounting standards produced by the IASB
============================
• Managerial Accounting
The name given to accounting systems designed for internal users
, ============================
• Public Company Accounting Oversight Board (PCAOB)
A private, non-profit organization that effectively serves as an arm of the SEC in registering,
inspecting, and disciplining the auditors of all publicly traded companies
============================
• Statement of Cash Flows
This document reports the amount of cash collected and paid out by a company in the following
three types of activities: operating, investing, and financing
============================
• Accounting Equation
Assets = Liabilities + Owners' Equity
============================
Accumulated Other Comprehensive Income
The source of these increased assets
============================
• Assets
Probable future economic benefit obtained or controlled by a particular entity as a result of past
transactions or events
============================
• Balance Sheet
A statement of financial position shows the financial resources the company owns or controls
and the claims on those resources
============================
• Book Value
measured by the amount of owners' equity, is usually less than the company's market value
============================
• Comparability
information becomes much more useful when it can be related to a benchmark or standard.
============================
• Conservatism
a pervasive factor in accounting, can be summarized as follows: When in doubt, recognize all
losses but don't recognize any gains
============================
• Consistency
Comparability of accounting data for the same company over time
============================
• Disclosure
Convey the details in a narrative note without ever including anything in the financial statements
themselves.
============================
• Earnings Per Share (EPS)
The amount of net income associated with each share of stock.
============================
, • Entity Concept
The idea that personal financial activity is kept separate from business financial activity
============================
• Expenses
The amount of assets consumed from the performance of business operations and thus are the
opposite of revenues
============================
• External Audit
an external check by public accountants that are not part of any one company's accounting staff,
so they can give an independent outside opinion on the quality of the financial statements of
companies that they audit
============================
• Financing Activities
Those activities whereby cash is obtained from, or repaid to, owners and creditors
============================
• Gains
Refers to money made on activities outside the normal business of a company
============================
• Going Concern Assumption
assumption that a company would continue in business for the foreseeable future
============================
• Historical Cost Convention
assets and liabilities initially are recorded in the accounting system at their original, or historical,
costs. They are not adjusted for subsequent changes in value
============================
• Income Statement
A company's financial performance for a specified period of time.
============================
• Investing Activities
The purchase and sale of land, buildings, and equipment. Investing activities also include buying
and selling stocks of other companies
============================
• Liabilities
represent its obligations on a balance sheet
============================
• Liquidity
A company's ability to pay its debts in the short run
============================
• Losses
Refers to money lost on activities outside the normal business of a company
============================
• Materiality
to the question of whether an item is large enough to make any difference to anyone
============================
Complete Definitions & Key Concepts
• Accounting
A system of providing "quantitative information, primarily financial in nature, about economic
entities that is intended to be useful in making economic decisions."
============================
• American Institute of Certified Public Accountants (AICPA)
The professional organization of certified public accountants in the United States
============================
• Balance Sheet
Document which reports the resources of a company (the assets), the company's obligations
(the liabilities), and the owners' equity, which represents how much money has been invested in
the company by its owners
============================
• Bookkeeping
The preservation of a systematic, quantitative record of an activity
============================
• Certified Public Accountant
A person who has taken a minimum number of college-level accounting classes, has passed the
dreaded CPA exam, and has met other requirements set by his or her state
============================
• Financial Accounting
The name given to accounting information provided for and used by external users
============================
• Financial Accounting Standards Board (FASB)
Governmental body that sets accounting standards in the United States.
============================
• Financial Statements
The three primary financial information documents: the balance sheet, income statement, and
statement of cash flows
============================
• Income Statement
This document reports the amount of net income earned by a company during a period, with
annual and quarterly income statements being the most common
============================
• Internal Revenue Service (IRS)
The government agency responsible for tax collection and tax law enforcement
============================
• International Accounting Standards Board (IASB)
An independent, international body formed to develop worldwide accounting standards
============================
• International Financial Reporting Standards (IFRS)
The accounting standards produced by the IASB
============================
• Managerial Accounting
The name given to accounting systems designed for internal users
, ============================
• Public Company Accounting Oversight Board (PCAOB)
A private, non-profit organization that effectively serves as an arm of the SEC in registering,
inspecting, and disciplining the auditors of all publicly traded companies
============================
• Statement of Cash Flows
This document reports the amount of cash collected and paid out by a company in the following
three types of activities: operating, investing, and financing
============================
• Accounting Equation
Assets = Liabilities + Owners' Equity
============================
Accumulated Other Comprehensive Income
The source of these increased assets
============================
• Assets
Probable future economic benefit obtained or controlled by a particular entity as a result of past
transactions or events
============================
• Balance Sheet
A statement of financial position shows the financial resources the company owns or controls
and the claims on those resources
============================
• Book Value
measured by the amount of owners' equity, is usually less than the company's market value
============================
• Comparability
information becomes much more useful when it can be related to a benchmark or standard.
============================
• Conservatism
a pervasive factor in accounting, can be summarized as follows: When in doubt, recognize all
losses but don't recognize any gains
============================
• Consistency
Comparability of accounting data for the same company over time
============================
• Disclosure
Convey the details in a narrative note without ever including anything in the financial statements
themselves.
============================
• Earnings Per Share (EPS)
The amount of net income associated with each share of stock.
============================
, • Entity Concept
The idea that personal financial activity is kept separate from business financial activity
============================
• Expenses
The amount of assets consumed from the performance of business operations and thus are the
opposite of revenues
============================
• External Audit
an external check by public accountants that are not part of any one company's accounting staff,
so they can give an independent outside opinion on the quality of the financial statements of
companies that they audit
============================
• Financing Activities
Those activities whereby cash is obtained from, or repaid to, owners and creditors
============================
• Gains
Refers to money made on activities outside the normal business of a company
============================
• Going Concern Assumption
assumption that a company would continue in business for the foreseeable future
============================
• Historical Cost Convention
assets and liabilities initially are recorded in the accounting system at their original, or historical,
costs. They are not adjusted for subsequent changes in value
============================
• Income Statement
A company's financial performance for a specified period of time.
============================
• Investing Activities
The purchase and sale of land, buildings, and equipment. Investing activities also include buying
and selling stocks of other companies
============================
• Liabilities
represent its obligations on a balance sheet
============================
• Liquidity
A company's ability to pay its debts in the short run
============================
• Losses
Refers to money lost on activities outside the normal business of a company
============================
• Materiality
to the question of whether an item is large enough to make any difference to anyone
============================
