Words that you should know in accounting

• Accounting = The process of identifying, recording, and communicating the economic events of an organization to interested users of the information.
• Assets = Resources owned by a business.
• Auditing = The examination of financial statements by a certified public accountant in order to express an opinion as to the fairness of presentation.
• Basic accounting equation = Assets are all the liabilities plus owner's equity.
• Bookkeeping = A part of accounting that involves only the recording of economic events.
• Corporation = A business organized as a separate legal entity under state corporation law having ownership divided into transferable shares of stock.
• Cost principle = An accounting principle that states that assets should be recorded at their cost.
• Drawings = Withdrawal of cash or other assets from an unincorporated business for the personal use of the owner/ owners.
• Economic entity assumption = An assumption that economic events can be identified with a particular unit of accountability.
• Ethics = The standard conduct by which one's actions are judged as right or wrong, honest or dishonest, fair or not fair.
• Expenses = The cost of assets consumed or services used in the process of earning revenue.
• FASB = A private organization that established generally accepeted accounting principles. ( Financial Accounting Standard Board ).
• GAAP = A common set of standards that indicate how to report economic events. ( Generally Accepted Accounting Principles ).
• Investment by owner = The assets put into the business by the owner.
• Liabilities = Creditorship claims on total assets.
• Managing consulting = An area of public accounting involving financial planning and control and the development of accounting and computer system.
• Monetary unit consumption = An consumption stating that only transaction data that can be expressed in terms of money be included in the accounting records of the economic entity.
• Net income = The amount by which revenues exceed expenses.
• Owner's equity = The ownership claim on total assets.
• Partnership = An association of two/ more persons to carry on as co-owners of a business for profit
• Private accounting = An area of accounting within a company that involves such activities as cost accounting, budgeting, and accounting information systems.
• Proprietorship = A business owned by one person
• Public accounting = An area of accounting in which the accountant offers expert service to the general public.
• Revenues = The gross increase in owner's equity resulting from business activities entered into for the purpose of earning income.
• Taxation = An area of public accounting involving tax advice, tax planning, and preparing tax returns.