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Accounting > Accounting Chap 1 > Flashcards

Accounting Chap 1 Flashcards

1
Q

Provides financial information about the current operations and financial condition of a business to individuals, agencies, and organizations.

A

Purpose of Accounting

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2
Q

Users of Accounting Information

A
  1. Owners
  2. Managers
  3. Creditors
  4. Government agencies
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3
Q

a system of gathering financial information about a business

and reporting this information to users.

A

Accounting

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4
Q

6 major steps of the accounting process

A
  1. Analyzing
  2. Recording
  3. Classifying
  4. Summarizing
  5. Reporting
  6. Interpreting
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5
Q

a) Looking at events that have taken place.

b) Thinking about how these events have affected the business.

A

Analyzing

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6
Q

a) Entering financial information about events into an accounting system.
b) Financial information can be entered manually; however, most businesses use computers.

A

Recording

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7
Q

a) Sorting and grouping similar items together.

b) Business accounts are classified.

A

Classifying

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8
Q

a) Bringing various items of information together.

b) Determines a result.

A

Summarizing

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9
Q

a) Communicating results.

b) Results are communicated in the form of financial statements.

A

Reporting

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10
Q

a) Deciding the meaning and importance of reported information.
b) Uses ratio and percentage analyses to explain how pieces of information relate to one another.

A

Interpreting

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11
Q

A. Developed by the Financial Accounting Standards Board (FASB), a private standard-setting body.
B. Provides concepts and guidelines to be followed during the accounting process.

A

Generally Accepted Accounting Principles (GAAP)

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12
Q

5 steps for FASB use to develop GAAP:

A
  1. The issue is placed on FASB’s agenda.
  2. A discussion memorandum is issued.
  3. Public hearings are held around the country.
  4. An exposure draft is issued.
  5. A final statement of financial accounting standards (SFAS) is
    issued.
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13
Q

3 Types of Ownership Structures

A

SOLE PROPRIETORSHIP
PARTNERSHIP
CORPORATION

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14
Q
  1. The business is owned by one person.
  2. The owner assumes all the risks for the business personally.
  3. The owner makes all of the business decisions.
A

Sole Proprietorship

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15
Q
  1. The business is owned by more than one person.
  2. Partners assume all the risks for the business personally.
  3. Owners share risks and decision making.
  4. Partners may disagree about the way the business should be run.
A

Partnership

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16
Q
  1. The business is owned by stockholders.
  2. Corporations usually employ professional managers.
  3. Owners’ risks are limited to their initial investment.
  4. In publicly owned corporations, shareholders often have very little influence on business decisions.
A

Corporation

17
Q

Types of Businesses

A

SERVICE BUSINESS
MERCHANDISING BUSINESS
MANUFACTURING BUSINESS

18
Q

A BUSINESS THAT PROVIDES A SERVICE. ie Funeral Home, Computer Consultant, Physician

A

SERVICE BUSINESS

19
Q

A BUSINESS THAT BUYS A PRODUCT FROM ANOTHER BUSINESS TO SELL TO CUSTOMERS. ie: Department store, Funeral Home, Jewelry Store

A

MERCHANDISING BUSINESS

20
Q

A BUSINESS THAT MAKES A PRODUCT TO SELL. ie: Automobile Manufacturer, Furniture Maker, Toy Factory

A

MANUFACTURING BUSINESS

21
Q

How is a funeral home classified as a business??

A

Since a funeral home offers both service (funeral, cremation, etc.) AND merchandise (caskets, vaults, urns, clothing, etc.), it is considered a:

SERVICE-MERCHANDISING business

22
Q
  1. Record, sort, and file accounting information.
  2. Specialize in various areas of accounting.
  3. Require at least one year of accounting education.
A

Accounting Clerks

23
Q
  1. Supervise the work of accounting clerks, perform daily accounting work, and summarize accounting information.
  2. In small-to-medium-sized businesses, may also help interpret accounting information.
  3. Require one to two years of accounting education and some experience as an accounting clerk.
A

Bookkeepers

24
Q
  1. Provide accounting, auditing, or tax services under the direct
    supervision of an accountant.
  2. Generally require a two-year degree or significant accounting and bookkeeping experience.
A

Para-accountants

25
Q
  1. Design the accounting information system and focus on analyzing and interpreting information.
  2. Enter the field with a college degree in accounting. Since many states require 150 credit hours to sit for the CPA exam, many students are also earning a masters degree.
A

Accountants

26
Q

Accountants are employed in:

a) public accounting
b) private (managerial) accounting
c) governmental accounting
d) not-for-profit accounting

A

1

27
Q 
Employees of private businesses
Controller
Accounting Information Systems; Financial, Cost, and Tax Accounting; Budgeting; and Internal Auditing
CMA (Certified Managerial Accountant)
CIA (Certified Internal Auditor)
A

PRIVATE ACCOUNTING

Accounting (9 decks)

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