Accounting Honors:
Chapter II Vocabulary
1. Financial Statements – is simply a declaration of what is believed to be true financial statements
2. Balance sheet – is a financial statement that describes where the enterprise stands at a specific date
3. Income statement – is an activity statement that depicts the revenues and expenses for a designated period of time
4. Positive cash flows – result of revenue
5. Negative cash flow – result of expenses
6. Statement of cash flow – is a particularly important in understanding an enterprise for purposes of investment and credit decisions
7. Articulation – a way that relate balance sheets, statement of cash flow, and income statements
8. Business entity – is an economic unit that engages in identifiable business activities
9. Cost principles – policy of accounting for many assets at the cost of the business
10. Going concern – the balance sheet of a business is prepared on the assumption that the business is a continuing enterprise
11. Inflation – is a term used to describe the situation where the value of the monetary unit decreases
12. Deflation – situation where the value of a monetary unit increases
13. Stable-dollar assumption – assumption that the dollar is a stable unit of measurement
14. Owner’s equity – represents the owner’s claim on the assents of the business
15. Accounting equation – assets = Liabilities + Owner’s Equity
16. Revenues – are increases in the company’s assents form its profit-directed activities, and they result in positive cash flows
17. Expenses – are deceases in the company’s assets form its – profit-directed activities, and the result in negative cash flow
18. Operating activities – are the cash effects of revenue and expense transactions that are included in the income statement
19. Investing activities – are the cash flow effects of purchasing and selling assents
20. Financing activities – are the cash effects of the owners investing in the company and creditors...