1st Handout

Question 1

“ It is a service activity. It’s function is to provide quantitative information, primarily financial in nature, about economic entities, that is intended to be useful in making economic decision”

Answer 1

Accounting

Question 2

“ The art of recording, classifying and summarizing in a significant manner and in terms of money, transactions and events which are in part at least of a financial character and interpreting the results thereof”.

Answer 2

American Institute of Certified Public Accountants

Question 3

Importance of Accounting Levels

Answer 3

Personal Level
Professional Level
Business Level

Question 4

Forms Of Business Organizations

Answer 4

Sole Proprietorship
Partnership
Corporation

Question 5

A business entity owned by one person called a sole proprietor.

Answer 5

Sole Proprietorship

Question 6

a business entity owned by two or more persons called partners who have agreed to contribute money, property and industry to a common fund with the intention of dividing the profits among themselves

Answer 6

Partnership

Question 7

a business registered as an artificial person under the operation of law. Its existence is evidenced by its Articles of Incorporation and Corporate By-laws registered with the Securities and Exchange Commission (SEC). A corporation that issues shares equity to shareholders is called a profit corporation. A corporation that does not issue share equity is a non profit corporation

Answer 7

Cooperation

Question 8

Primary Activities Of Businesses

Answer 8

Servicing
Merchandising
Manufacturing

Question 9

to earn revenue, this business renders services to clients in exchange for a fee.

Answer 9

Servicing

Question 10

engages in the “buying” and “selling” of goods. Its earnings are primarily derived from the markup (profit) it adds to the cost of goods it sells to the customers.

Answer 10

Merchandising

Question 11

converts raw materials into finished goods that are to be sold at selling price.

Answer 11

Manufacturing

Question 12

Users Of Accounting Information

Answer 12

Internal Users (Management Group) And External Users (Financing and Public Group)

Question 13

They are those who manage or own the business

Answer 13

Internal Users

Question 14

Do not own or manage the business.

No direct access to management of the business.

Answer 14

External Users

Question 15

GAAP

Answer 15

Generally Accepted Accounting Principles

Question 16

Principles guide accountants in measuring, recording and reporting financial activities of an enterprise. Developed based on experience, research and careful study

Answer 16

GAAP

Question 17

Main Objective Expressed in the Standard Auditors Report.

Answer 17

“to fairly present the financial statements…in conformity with generally accepted accounting principles”