Horngren’s Accounting Chapter 2 Vocabulary

Accounting – Planning, recording, analyzing , and interpreting financial information
External transactions – are exchange of values between two entities, which yield changes in the accounting equation.
Recordkeeping – Part of accounting that involves recording transactions and events, either manually or electronically. Bookkeeping
Internal control consists of all the related methods and measures adopted within an organization to safeguard its assets and to enhance the accuracy and reliability of its accounting records.
A. True
B. False – TRUE
partnership – A business owned by two or more persons associated as partners.
Voucher system – A network of approvals by authorized individuals, acting independently, to ensure that all disbursements by check are proper.
liabilities – Claim against asset debts owed to other example accounts payable loans payable
specific identification – the actual cost paid for units still here = ending inventory, actual cost paid for units sold = COGS
Revenue – money received (or to be received) from having SOLD a product or PERFORMED a service
Benefits of international accounting standards – * Standardise financial statements internationally
* Reduce variations of accounting treatments
* Allow users of FS to make inter-firm comparisons
Candy Lightner, founder of Mothers Against Drunk Driving, had a vision of getting rid of alcohol-related car crashes. She exemplifies a transformational leader style.
Cash equivalents (3 months) – Money market funds, Treasury bills, Certificates of deposit
Accounting – Communicate information to users so they can make an informed decision
Liabilities – ~ Past transaction
~ Present obligation
~ Future economic loss
Cаndy Lightner, fоunder оf Mоthers Agаinst Drunk Driving, hаd a vision of getting rid of alcohol-related car crashes. She exemplifies a transformational leader style.
retained earning (definition and formula) – income that is not disbursed to shareholders and Formula:
beginning balance of retained earnings
+net income or Net loss( revenue-expenses)
=ending balance of retained earnings
journalizing – the process of recording business transactions in a journal

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