History & Definition
It is the comprehensive process of recording, summarizing, reporting and analyzing of financial transactions pertaining to a business.
Accounting
A sector of Accounting that is made up of accountants who are into teaching, research, and training & development. Accountants can pursue a career as a faculty member in a school, an author of an accounting book, a researcher, a trainer, or a reviewer.
Accounting Education
This accounting principle requires that expenses be matched with revenues.
Matching Principle
This is the principle means in measurement; to include in the accounting records only transaction data that can be expressed in terms of money
Monetary Unit/Measurement
Liabilities + Shareholder's Equity
Assets
This refers to a concise summary of financial transactions over an accounting period, summarizing a company's operations, financial position, and cash flows.
Financial statements
A branch of Accounting often times considered as a subset of management accounting, cost accounting refers to the recording, presentation, and analysis of manufacturing costs.
Cost Accounting
Requires that activities of the entity be kept separate and distinct from the activities of the owner and all other economic entities.
Separate Entity or Economic Entity Assumption
All information that relates to the function of a business’s financial statements must be disclosed in notes accompanying the statements.
Full Disclosure
Share Capital + Retained Earnings
Total Shareholder's Equity
He was the first to describe the system of debits and credits in journals and ledgers that is still the basis of today's accounting systems.
Luca Pacioli
A sector of Accounting also known as practice in commerce and industry. Accountants in this sector provide a staff function which supports the company by performing accounting-related tasks.
Private Accounting
Revenues are recognized as soon as product has been sold or service has been performed, regardless of when the money is actually received.
Revenue Recognition
This is the concept that a business should only record its assets, liabilities, and equity investments at their original purchase costs.
Cost Principle
Current Assets + Non-current Assets
Total Assets
This was enacted to provide guidelines, restrictions to accountants and their engagements, and to businesses and their policies procedures.
Sarbanes-Oxley Act (SOX)
This branch of Accounting refers to the examination of financial statements by an independent party with the purpose of expressing an opinion as to fairness of presentation and compliance with GAAP.
Auditing
Financial reports should show results over a distinct period of time to create a standard set of comparable periods.
Time Period
Once you adopt an accounting principle or method, you should continue to use it until a demonstrably better principle or method comes along.
Consistency Principle
Total Liabilities - Non-current Liabilities
Current Liabilities
Year the system Double-entry bookkeeping was introduced and described in Summa de Arithmetica, Geometria, Proportioni et Proportionalita.
1494
A branch of Accounting that focuses on providing information for use by internal users, the management. This branch deals with the needs of the management rather than strict compliance with generally accepted accounting principles.
Managerial Accounting
When preparing financial statements, the assumption that a company will continue to exist long enough to carry out its objectives and commitments and will not liquidate in the foreseeable future.
Going Concern
This is the concept that you should record a transaction in the accounting records if not doing so might have altered the decision making process of someone reading the company's financial statements.
Materiality
Assets - Liabilities
Shareholder's Equity