AccountingThe process by which financial information about a business is recorded, classified, summarized, interpreted, and communicated to owners, managers, and other interested parties

Accounting systemA process designed to accumulate, classify, and summarize financial data

AuditingThe review of financial statements to assess their fairness and adherence to generally accepted accounting principles

Auditor’s reportAn independent accountant’s review of a firm’s financial statements

Certified public accountant (CPA)An independent accountant who provides accounting services to the public for a fee

CorporationA publicly or privately owned business entity that is separate from its owners and has a legal right to own property and do business in its own name; stockholders are not responsible for the debts or taxes of the business

CreditorOne to whom money is owed

Discussion memorandumAn explanation of a topic under consideration by the Financial Accounting Standards Board

Economic entityA business or organization whose major purpose is to produce a profit for its owners

EntityAnything having its own separate identity, such as an individual, a town, a university, or a business

Exposure draftA proposed solution to a problem being considered by the Financial Accounting Standards Board

Financial statementsPeriodic reports of a firm’s financial position or operating results

Generally accepted accounting principles (GAAP)Accounting standards developed and applied by professional accountants

Governmental accountingAccounting work performed for a federal, state, or local governmental unit

International accountingThe study of accounting principles used by different countries

Management advisory servicesServices designed to help clients improve their information systems or their business performance

Managerial accountingAccounting work carried on by an accountant employed by a single business in industry

PartnershipA business entity owned by two or more people who are legally responsible for the debts and taxes of the business

Public accountantsMembers of firms that perform accounting services for other companies

Separate entity assumptionThe concept of keeping a firm’s financial records separate from the owner’s personal financial records

Social entityA nonprofit organization, such as a city, public school, or public hospital

Sole proprietorshipA business entity owned by one person who is legally responsible for the debts and taxes of the business

Statements of Financial Accounting StandardsAccounting principles established by the Financial Accounting Standards Board

StockCertificates that represent ownership of a corporation

StockholdersThe owners of a corporation; also called shareholders

Tax accountingA service that involves tax compliance and tax planning