ACCOUNTING EXAM 1 CH. 1-4
Accounting ✔✔info system that identifies, records, and communicates the economic
events of an organization to interested users
Assets ✔✔resource a business owns
Auditing ✔✔examination of financial statements by a certified public accountant in order
to express an opinion as to how accurately the financial statements present the company
results and financial position
Balance Sheet ✔✔financial statement that reports the assets, liabilities, and stock
holders’ equity at a specific date.
Basic Accounting Equation ✔✔Assets = Liabilites+Stockholder's Equity
Bookkeeping ✔✔part of accounting that involves only the economic recording of events
Common Stock ✔✔describes the total amount paid in by stockholders for the shares they
purchase
Convergence ✔✔process of reducing the differences between US GAAP and IFRS
Corporation ✔✔business organized by a separate legal entity under state corporation law,
having ownership divided into transferable shares of stock
Dividend ✔✔a distribution by a corporation to its stockholders
Economic Entity Assumption ✔✔an assumption that requires that the activities of the
entity be kept separate and distinct from the activities of its owner and all other economic
entities
Ethics ✔✔standards of conduct by which ones actions are judged as right or wrong,
honest or dishonest, fair or unfair
Expanded Accounting Equation ✔✔Assets=Liabilities+Common Stock+Revenues-
Expenses-Dividends
