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2ND : Fundamentals of Accounting Business and Management > 3RD QUARTER FLASHCARDS > Flashcards

3RD QUARTER FLASHCARDS

1
Q

It is the systematic process of measuring and reporting relevant financial information about the activities of an economic organization or unit.

A

Accounting

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2
Q

The underlying purpose of accounting

A

To provide financial information.

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3
Q

Why is accounting considered as the ‘language of the business’?

A

It communicates the financial condition and performance of a business to interested users for decision-making purposes.

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4
Q

It communicates the financial condition and performance of a business to interested users for decision-making purposes.

A

GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP)

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5
Q

The accounting standards used in the Philippines

A

Philippine Accounting Standards (PAS) and Philippine Financial Reporting Standards (PFRS)

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6
Q

4 Fundamental Concepts

A

Entity Concepts, Periodicity, Going Concern, and Accrual Basis

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7
Q

ENTITY CONCEPT

A

It regards the business enterprise as separate and distinct from its owners and other business enterprises.

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8
Q

PERIODICITY

A

It is the concept behind providing financial accounting information about the economic activities of an enterprise for specified time periods.

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9
Q

GOING CONCERN

A

This assumes that a company will continue to exist long enough to carry out its objectives and commitments and will not liquidate in the foreseeable future.

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10
Q

ACCRUAL BASIS

A

It requires that all business transactions and other events are recognized in the accounting records when they occur, rather than when the cash or equivalent is received or paid.

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11
Q

6 Basic Accounting Principles

A

Objectivity, Cost, Full Disclosure, Matching, Revenue Recognition, and Materiality

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12
Q

OBJECTIVITY PRINCIPLE

A

It states that all business transactions that will be entered in the accounting records must be duly supported by verifiable evidence.

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13
Q

COST PRINCIPLE

A

It means that all properties and services acquired by the business must be recorded at their original acquisition cost.

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14
Q

FULL DISCLOSURE PRINCIPLE

A

It states that all material facts that will significantly affect the financial statements must be indicated.

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15
Q

MATCHING PRINCIPLE

A

It means that in a given accounting period, the revenue recorded should have its corresponding expense recorded, in order to show the true profit of the business.

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16
Q

REVENUE RECOGNITION PRINCIPLE

A

Revenues are recognized as soon as goods have been sold (delivered to the customers) or service has been rendered, regardless of when the money is actually received.

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17
Q

MATERIALITY PRINCIPLE

A

Business transactions that may affect the decision of a user of financial information are considered important or material, and thus, must be reported properly.

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18
Q

THE ACCOUNTING EQUATION

A

Assets = Liabilities + Owner’s Equity

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19
Q

These are records in which all accounts and transactions of a business are maintained on a regular basis.

A

BOOKS OF ACCOUNTS

20
Q

A business maintains two books of accounts, namely:

A
  1. Journal; and

2. Ledger

21
Q

Business transactions are recorded in the journal through journal entries. This recording process is called __________.

A

journalizing

22
Q

Journal provides a __________ and ______________ _________ of transactions.

A

systematic and chronological record

23
Q

Why does a journal simplify the ledger?

A

Because some details in the journal need not be written in the ledger

24
Q

Journal ensures what system is observed when recording transactions?

A

double-entry bookkeeping system

25
Q

How does a journal solve misunderstandings?

A

It serves as proof and legal evidence of transactions.

26
Q

These are journals used to record recurring transactions. It is used to record transactions of a similar nature.

A

Special Journals (SJ)

27
Q

How can special journals be helpful?

A

It simplify the recording process, thus providing an efficient way of recording and retrieving information.

28
Q

It looks like a two-column columnar notebook and it is the journal used to record all other business transactions not recorded in the special journals.

A

General Journal (GJ)

29
Q

Why is the ledger called the “book of secondary entries” or the “book of final entries”?

A

Because it is used only after business transactions are first recorded in the journals.

30
Q

The process of recording in the ledger is called ___________.

A

posting

31
Q

How is the ledger used?

A

It is used to sort all entries made in the journal in chronological order and to group all transactions that affect individual accounts in order to facilitate the preparation of financial statements.

32
Q

What balances are shown in the general ledger and the subsidiary ledger?

A

The balance of the controlling account is shown in the general ledger, while the balances of the accounts that comprise the controlling account are shown in the subsidiary ledger.

33
Q

These are economic events that affect the financial position of a business.

A

Business transactions

34
Q

It is the process of studying a transaction to determine its economic effect ( in terms of money) on the entity’s accounting equation.

A

Analysis of Business transactions

35
Q

What is a normal balance of an account?

A

Is on the side where an increase in that account is recorded.

36
Q

Normal Balance of Assets

A

debit

37
Q

Normal Balance of Liabilities

A

credit

38
Q

Normal Balance of Equity

A

credit

39
Q

Normal Balance of Withdrawal

A

debit

40
Q

Normal Balance of Revenue

A

credit

41
Q

Normal Balance of Expenses

A

debit

42
Q

What is an Accounting Cycle?

A

It represents the steps or procedures used to record transactions and prepare financial statements.

43
Q

10 accounting cycles

A
  1. Identifying and analyzing business documents or transactions
  2. Recording transactions in the journal
  3. Posting journal entries to the ledger
  4. Preparing the trial balance
  5. Preparing the adjusting entries
  6. Preparing the worksheet
  7. Preparing the financial statements
  8. Closing the book/Closing entries
  9. Preparing the post-closing trial balance
  10. Recording of reversing entries
44
Q

It is a list of general ledger accounts and their balances. It is prepared to check the equality of total debits and total credits taken from the ledger

A

TRIAL BALANCE

45
Q

It is committed when the number of digits in an amount is incorrectly increased or decreases or when a decimal point has been moved or misplaced.

A

Transplacement or Slide error

46
Q

It occurs when digits in an amount are interchanged.

A

Transposition error

47
Q

Account titles are listed in the trial balance In the following order:

A
  1. Assets
  2. Liabilities
  3. Equity
  4. Income and
  5. Expenses

2ND : Fundamentals of Accounting Business and Management (8 decks)

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