Processes and Policies
The recording, measurement, and interpretation of financial information
What is accounting?
Accountants employed by large corporations, government agencies, and other organizations to prepare and analyze their financial statements
What are private accountants?
A book or computer file with separate sections for each account
What is a ledger?
The movement of money through an organization over a daily, weekly, monthly, or yearly basis.
What is cash flow?
A system of recording and classifying business transactions that maintains the balance of the accounting equation
What is double-entry bookkeeping?
The internal use of accounting statements in planning and directing the organization's activities
What is managerial accounting?
An individual who has been state-certified to provide accounting services (e.g., preparation of financial records, filing of tax returns, audits of corporate financial records)
What is a Certified Public Accountant (CPA)?
An internal financial plan that forecasts expenses and income over a set period of time
What is a budget?
The total amount of money received from the sale of goods or services, as well as from related business activities
What is revenue?
The four-step procedure of an accounting system: examining source documents, recording transactions in an accounting journal, posting recorded transactions, and preparing financial statements
What is an accounting cycle?
Accounting that is fit for legal review; involves analyzing financial documents in search of fraudulent entries or financial misconduct
What is forensic accounting?
Private accountant who, after rigorous examination, is certified by the IMA and who has some relevant organizational responsibility
What is a Certified Management Accountant (CMA)?
A financial report that shows an organization's profitability over a period of time (month, quarter, or a year)
What is an income statement?
The amount of money a firm spent to buy or produce the products it sold during the period to which the income statement applies
Calculations that measure an organization's financial health
What is ratio analysis?
Passed in 2002, requires accounting firms to separate their consulting and auditing businesses; corporate executives face potential jail sentences for inaccurate, misleading, or illegal accounting statements
What is the Sarbanes-Oxley Act?
A person responsible for obtaining and recording the information that accountants require to analyze a firm's financial position
What is a bookkeeper?
Summary of a firm's financial information, products, and growth plans for owners and potential investors
What is an annual report?
Revenues minus the COGS required to generate the revenues
What is gross income?
Founded in 1973, its mission is to establish and improve standards of financial accounting and reporting for the guidance and education of the public
What is the Financial Accounting Standards Board (FASB)?
Passed in 2010, this legislation limits the types of assets commercial banks can buy, the amount of capital they must maintain, and their use of derivative instruments
What is the Dodd-Frank Act?
Accounting professional who is certified by the ACFE to assist agencies like the FBI and the IRS discover and analyze evidence of accounting fraud
What is a Certified Fraud Examiner (CFE)?
A "snapshot" of an organization's financial position at a given moment
What is a balance sheet?
The total profit (or loss) after all expenses, including taxes, have been deducted from revenue
What is net income (or net earnings)?
Standards that encompass the details, complexities, and legalities of business and corporate accounting
What is Generally Accepted Accounting Principles (GAAP)?