MGMT 301 Chapter 1

Pregunta	Respuesta
accounting	a system of analyzing, recording, and summarizing the results of a business's activities and then reporting the results to decision makers.
managerial accounting reports	include detailed financial plans and continually updated reports bout the operating performance of the company.
financial statements	accounting reports that summarize the financial results of business and financing activities.
creditors	anyone to whom money is owed
banks	use financial statements to evaluate the risk that they will not be repaid for the money they've loaned to a company.
suppliers	check the business's credit standing and may also ask for its financial statements before entering into significant business relationships.
shareholders	rely on financial statements to evaluate whether the company is financially secure and likely to be a profitable investment.
the basic accounting equation	Resources owned by the company = resources owed to creditors + to shareholders. Assets = Liabilities + Shareholder's Equity
separate entity assumption	the financial reports of a business are assumed to include the results of only that business's activities
account payable	the amount owed is called an account payable because purchases made using credit are said to be "on account".
note payable	name is used because banks require borrowers to sign a legal document called a note, which describes details about the company's promise to repay the bank.
wages payable	wages owed to employees.
taxes payable	taxes owed to government.
asset	an economic resource presently controlled by the company; it has measurable value and is expected to benefit the company by producing cash inflows or reducing cash outflows in the future.
liability	a measurable amount that the company owes to creditors.
shareholder's equity	represents the owners' claims on the business.
net income	profit revenues - expenses
contributed capital	paid in by shareholders
retained earnings	earned by the company
dividends	profit distributed
financial statements	1) income statement 2) statement of retained earnings 3) balance sheet 4) statement of cash flows
income statement	reports the amount of revenues less expenses for a period of time.
unit of measure assumption	results of business activities should be reported in an appropriate monetary unit, which in Canada is the Canadian dollar.
accounts	accumulate and report the effects of each different business activity.
statement of retained earnings	reports he way that net income and the distribution of dividends affected the financial position of the company during the period.
balance sheet	reports the amount of assets, liabilities, and shareholder's equity of a business at a point in time.
any account name containing receivable is an...	asset
any account name containing payable is a...	liability
statement of cash flows	reports the operating, investing, and financing activities that caused increases and decreases in cash during the period.
generally accepted accounting principles (GAAP)	rules of accounting approved by the Canadian Institute of Chartered Accountant for use in Canada.
International Financial Reporting Standards (IFRS)	rules of accounting created by the International Accounting Standards Board (ASB) for international use.
publicly accountable profit-oriented enterprises	have shares traded in a public market or hold assets in a fiduciary capacity for someone else and are required to use IFRS
private enterprise	do not have publicly traded shares in an open market nor do they hold assets in a fiduciary capacity for someone else; have the option to use IFRS or ASPE
Accounting Standards for Private Enterprises (ASPE)	rules of accounting that address issues that are more relevant in a private enterprise environment and therefore can be used by private enterprises only.
Canadian Auditing Standards (CAS)	provide auditors with up-to-date tools and required procedures in order to carry out high quality financial statement audits in today's complex business environment.
Sarbanes-Oxley Act (SOX)	created by the US Congress after the fall of Enron due to accounting fraud; includes regulating on many topics, including internal control systems and certification of executives.

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