1. Accounting is a process of identifying, recording and summarizing economic information and reporting it to the end users/decision makers. 2.

Event ---------(Recorded and Analyzed)---------Accountant s Analysis and Recording---------(Summarized into)---------Financial Statements--------(Communicated to)--------Users 3. Management Accounting is a field of accounting that serves internal decision makers such as top executives, department heads and people at other management levels within an organization. 4. Form 10-k- A document that US companies file annually with SEC. It contains the company s financial statements. 5. Balance sheet: Financial status of a business entity at a particular instant of time. 6. Assets = Liabilities + Owners equity 7. Assets: Economic resources that a company expects to help generate future cash inflows or help reduce future cash outflows. 8. Liabilities: Economic obligations to outsiders or claims against its assets by outsiders. 9. Notes Payable: Promissory notes that are evidence of debt and state the terms of payment. 10. OE: Owner s claim on organization s assets less total liabilities. 11. Entity concept: An org stands apart from other org and individuals as a separate economic unit. 12. Transaction: Any event that affects financial position of entity and that an accountant can reliably record in money terms. 13. Long lived asset: An asset that a company expects to provide services for more than a year. 14. Account: Summary record of changes in particular asset, liability or owner s equity. 15. Compound entry: transaction that affects more than two accounts. 16. Sequence: 1) Journalizing: (diarize transactions chronologically, record double effects of every transaction date wise) 2) Account heads 3) Summarize the account heads and balance of an account-debit or credit sign 4) Trial balance: Summary of account head balances

5) P and L 6) Balance sheet 17. Ownership types: Sole Partnership, Partnership, Corporations (Limited liability) 18. Paid in capital = Capital at par + Security premium 19. SOX act: A law passed by US Congress in 2002 that gave the government a larger role in regulating the audit profession.