Summary with the 11th edition of Financial Accounting by Needles and Powers

Practice exam with the 11th edition of Financial Accounting by Needles & Powers

This Glossary gives an overview of important terms used in the field of Financial Accounting. The Glossary can also be used while studying the book by Powers and Needles, Chapters 1 to 7 and 11 & 12. Accounting An information system that measures, processes, and communicates financial information about an economic entity. Business An economic unit that aims to sell goods and services to customers at prices that will provide an adequate return to its owners. Profitability The ability to earn enough income to attract and hold investment capital. Liquidity The ability to have enough cash to pay debts when they are due. Operating activities Include buying, producing, and selling goods and services, hiring managers and other employees; and paying taxes. Investing activities Involve spending a company’s capital in ways that will help it achieve its goals. Include buying the resources needed to operate the business, such as land, buildings, and equipment, and selling those resources when they are no longer needed. Financing activities Involve obtaining adequate funds to begin operating the business and to continue operating it. They include obtaining capital from creditors, such as banks and suppliers, and from the company’s owners. They also include repaying creditors and...