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| Accounting equation | A description of the relationship between a company's assets, liabilities, and equity; expressed as Assets 5 Liabilities 1 Owner's Equity; also called the balance sheet equation. (See page(s) 42) |
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| Accounts payable | A liability created by buying goods or services on credit. (See page(s) 38) |
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| Accounts receivable | An asset created by selling products or services on credit. (See page(s) 37) |
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| AcSB: Accounting Standards Board | The authoritative committee that identifies generally accepted accounting standards. (See page(s) 59) |
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| ASB: Auditing Standards Board | The authoritative committee that identifies generally accepted auditing standards. (See page(s) 59) |
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| Assets | Properties or economic resources owned by the business; more precisely, resources with an ability to provide future benefits to the business. (See page(s) 37) |
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| Balance sheet | A financial statement that reports the financial position of a business at a point in time; lists the types and dollar amounts of assets, liabilities, and equity as of a specific date; also called the statement of financial position. (See page(s) 37) |
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| Balance sheet equation | Another name for the accounting equation. (See page(s) 42) |
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| Business activities | All of the transactions and events experienced by a business. (See page(s) 43) |
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| Business entity principle | The principle that requires every business to be accounted for separately from its owner or owners; based on the goal of providing relevant information about each business to users. (See page(s) 40) |
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| Business events | Activities that do not involve an exchange of economic consideration between two parties and therefore do not affect the accounting equation. (See page(s) 43) |
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| Business transaction | An exchange of economic consideration between two parties that causes a change in assets, liabilities, or owner's equity. Examples of economic considerations include products, services, money, and rights to collect money. (See page(s) 43) |
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| Calendar year | An accounting year that begins on January 1 and ends on December 31. (See page(s) 35) |
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| Cash flow statement | A financial statement that describes the sources and uses of cash for a reporting period, i.e., where a company's cash came from (receipts) and where it went during the period (payments); the cash flows are arranged by an organization's major activities: operating, investing, and financing activities. (See page(s) 38) |
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| CICA Handbook | The publication of the Canadian Institute for Chartered Accountants (CICA) that details generally accepted accounting principles in Canada. (See page(s) 59) |
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| Comparability | Similarity; ability to be compared with other information. (See page(s) 40) |
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| Consistency | Conformity with other or earlier information; using the same accounting procedures from one accounting period to the next. (See page(s) 40) |
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| Cost principle | The accounting principle that requires financial statement information to be based on actual costs incurred in business transactions; it requires assets and services to be recorded initially at the cash or cash equivalent amount given in exchange. (See page(s) 41) |
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| Creditors | Individuals or organizations entitled to receive payments from a company. (See page(s) 38) |
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| Debtors | Individuals or organizations that owe amounts to a business. (See page(s) 37) |
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| Economic consideration | Something of value (e.g., products, services, money, and rights to collect money). (See page(s) 43) |
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| Equity | The owner's claim on the assets of a business; more precisely, the assets of an entity that remain after deducting its liabilities; also called net assets. (See page(s) 38) |
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| Event | See business events. (See page(s) 43) |
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| Expenses | Costs incurred or the using up of assets as a result of the major or central operations of a business. (See page(s) 35) |
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| Financial statements | The most important products of accounting; include the income statement, statement of owner's equity, balance sheet, and cash flow statement. (See page(s) 34) |
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| Fiscal year | A one-year reporting period. (See page(s) 35) |
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| GAAP | See Generally Accepted Accounting Principles. (See page(s) 40) |
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| GAAS | See Generally Accepted Auditing Standards. (See page(s) 59) |
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| Generally Accepted Accounting Principles | The rules adopted by the accounting profession that make up acceptable accounting practices for the preparation of financial statements. (See page(s) 40) |
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| Generally Accepted Auditing Standards | Rules adopted by the accounting profession as guides for conducting audits of financial statements. (See page(s) 59) |
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| Going concern principle | The rule that requires financial statements to reflect the assumption that the business will continue operating instead of being closed or sold, unless evidence shows that it will not continue. (See page(s) 41) |
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| IASC: International Accounting Standards Committee | A committee that attempts to create more harmony among the accounting practices of different countries by identifying preferred practices and encouraging their worldwide acceptance. (See page(s) 60) |
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| Income statement | The financial statement that shows, by subtracting expenses from revenues, whether the business earned a profit; it lists the types and amounts of revenues earned and expenses incurred by a business over a period of time. (See page(s) 35) |
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| Liabilities | The debts or obligations of a business; claims by others that will reduce the future assets of a business or require future services or products. (See page(s) 37) |
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| Monetary unit principle | The expression of transactions and events in money units; examples include units such as the Canadian dollar, American dollar, peso, and pound sterling. (See page(s) 41) |
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| Natural business year | A 12-month period that ends when a company's sales activities are at their lowest point. (See page(s) 35) |
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| Net assets | Assets minus liabilities; another name for equity. (See page(s) 38) |
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| Net income | The excess of revenues over expenses for a period. (See page(s) 35) |
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| Net loss | The excess of expenses over revenues for a period. (See page(s) 35) |
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| Note payable | A liability expressed by a written promise to make a future payment at a specific time. (See page(s) 38) |
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| Objectivity principle | The accounting guideline that requires financial statement information to be supported by independent, unbiased evidence rather than someone's opinion; objectivity adds to the reliability, verifiability, and usefulness of accounting information. (See page(s) 41) |
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| Owner investments | The transfer of an owner's personal assets to the business. (See page(s) 37) |
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| Owner withdrawals | See withdrawals. (See page(s) 37) |
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| Owner's equity | Total assets minus total liabilities; represents how much of the assets belong to the owner. Increases with owner investments and net income and decreases with owner withdrawals and net loss. (See page(s) 37) |
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| Profit | Another name for net income. (See page(s) 35) |
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| Relevance | Information must make a difference in the decision-making process. (See page(s) 40) |
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| Reliability | The extent to which information is verifiable and neutral; implies a consensus among different measures. (See page(s) 40) |
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| Revenue recognition principle | Provides guidance on when revenue should be reflected on the income statement; the rule states that revenue is recorded at the time it is earned regardless of whether cash or another asset has been exchanged. (See page(s) 41) |
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| Revenues | The value of assets exchanged for goods or services provided to customers as part of a business's main operations; may occur as inflows of assets or decreases in liabilities. (See page(s) 35) |
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| Source documents | Documents that identify and describe transactions entering the accounting process; the source of accounting information, whether in paper or electronic form. (See page(s) 43) |
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| Statement of financial position | See balance sheet. (See page(s) 37) |
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| Statement of owner's equity | A financial statement that reports the changes in equity over the reporting period; beginning equity is adjusted for increases such as owner investment or net income and for decreases such as owner withdrawals or a net loss. (See page(s) 37) |
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| Transaction | See business transaction. (See page(s) 43) |
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| Withdrawals | The distributions of cash or other assets from a proprietorship or partnership to its owner or owners. (See page(s) 37) |