Accountingis a system that collects and processes (analyzes, measures, and records) financial information about an organization and reports that information to decision makers.

Accounting EntityAn is the organization for which financial data are to be collected.

Accounting Periodis the time period covered by the financial statements.

AuditAn AUDIT is an examination of the financial reports to ensure that they represent what they claim and conform with GAAP.

Balance Sheet (Statement of Financial Position)A (Statement of Financial Position) reports the amount of assets, liabilities, and stockholders' equity of an accounting entity at a point in time.

Basic Accounting Equation (Balance Sheet Equation)Assets = Liabilities + Stockholders' Equity.

Financial Accounting Standards Board (FASB)is the private sector body given the primary responsibility to work out the detailed rules that become generally accepted accounting principles.

Generally Accepted Accounting Principles (GAAP)are the measurement rules used to develop the information in financial statements.

Income Statement (Statement of Income, Statement of Earnings, or Statement of Operations)The (statement of income, statement of earnings, or statement of operations) reports the revenues less the expenses of the accounting period.

Notes (Footnotes)provide supplemental information about the financial condition of a company without which the financial statements cannot be fully understood.

Public Company Accounting Oversight Board (PCAOB)The PUBLIC COMPANY ACCOUNTING OVERSIGHT BOARD(PCAOB) is the private sector body given the primary responsibility to issue detailed auditing standards.

Securities and Exchange Commission (SEC)is the U.S. government agency that determines the financial statements that public companies must provide to stockholders and the measurement rules that they must use in producing those statements.

Statement of Cash Flows(Cash Flow Statement) reports inflows and outflows of cash during the accounting period in the categories of operating, investing, and financing.

Statement of Retained Earningsreports the way that net income and the distribution of dividends affected the financial position of the company during the accounting period.