| A | B |
|---|
| financial accounting | The area of accounting that focuses on reporting information to external users such as bankers, creditors, customers, government agencies and stockholders |
| managerial accounting | The area of accounting that focuses on reporting information to internal users such as company managers and officers |
| Full Disclosure Accounting Concept | All relevant financial information must be adequately and completely disclosed on financial statements necessary to understand a business's financial condition to owners, managers, leaders, and investors |
| Adequate Disclosure | Another name for Full Disclosure Accounting Concept |
| stakeholders | Any persons or groups affected by an ethical action |
| budget | A financial road map used by individuals and companies as a guide for spending and saving |
| pay yourself first | A strategy of setting aside at least 10% of after-tax income for saving and investing |
| surplus | A positive balance after total expenses are subtracted from total income |
| financial ratio | A comparison between two components of financial information |
| ratio analysis | The calculation and interpretation of a financial ratio |
| vertical analysis | Reporting an amount on a financial statement as a percentage of another item on the same financial statement |
| return on sales (ROS) | The ratio of income to total sales |
| total expenses ratio | Total Expenses divided by Total Sales |
| net income ratio | Net Income divided by Total Sales |
| Accounting Equation | Assets = Liabilities + Owner's Equity |
| bookkeeper | An employee who "keeps the books" or the financial records for a company |
| owner's equity | The amount remaining after the value of all liabilities is subtracted from the value of all assets |
| revenue | An increase in equity resulting from the sale of goods or services |
| expense | Unlike a liability, which is an amount that is owed, the cost of goods or services used to operate a business |
| asset | Anything of value, including cars, bikes, real estate, cash and jewelry, that is owned |
| liability | An amounts that are owed to others |
| equity | The difference between assets and liabilities |
| deficit | A negative balance after total expenses are subtracted from total income |
| permanent accounts | Accounts used to accumulate information from one fiscal period to the next |
| temporary accounts | Accounts used to accumulate information until it is transferred to the owner's capital account |
| closing entries | Journal entries used to prepare temporary accounts for a new fiscal period |
| post-closing trial balance | A trial balance prepared after the closing entries are posted |
| accounting cycle | The series of accounting activities included in recording financial information for a fiscal period |
| Going Concern Accounting Concept | Financial statements are prepared with the expectation that a business will remain in operation indefinitely |
