Got it: Vocabulary Three Principles of Accounting Who uses financial accounting verses management accounting reports. What assumptions provide the foundation for accounting systems.

Accounting is : foundation of business Language of business (pg. 32) Remember : Every industry has an accounting department or pays a company to manage their payroll, accounts receivables/payables.

FASB : Financial Accounting Standards Board A board of seven members (accounting professionals) that establish and communicate standards to the GAAP. Purpose: set out to improve corporate accounting practices, create a uniform standard across the financial markets.

GAAP: Generally Accepted Accounting Principles Common set of principles, standards and procedures that accountants should use. commonly accepted ways of reporting and recording accounting information Purpose to have a minimum level of consistency in the financial statements. xzz25RArsBAw

Financial Reports: Summarizes information about the financial status of a business Inputs ProcessingOutputs Source Task Documents Financial and Management Accounting Reports Page 32 Figure 2-7

Accounting Assumptions: o Business Entity o is when businesses financial information is recorded and reported separately from the owner’s personal financial information. o Accounting Period o a period covered by the accounting report o Going Concern o the operation & survivals of the company is indefinitely.

3 Principles in Accounting Recording the value of the asset at current market. The information that “makes a difference” to a user in reaching a business decision. Exchange Relevance

3 Principles in Accounting (continued) Matching expense with one period with the revenue from that same period, provides a reliable measure of profit. To make this much profit, it cost this much money. Matching Principle

1. Complete Problem 2-5 page 40 copy in textbook in your notebook 2. Understanding Concepts and Procedures (UCP) page 38: 2, 3, 5-8 Finish up