Accounting in Evolution Flashcards
What is the goal of accounting theory?
To provide a set of principles and relationships that explain observed practice and predict unobserved practices.
What role does accounting play in society?
To report how an organization utilizes scarce resources.
True or False: A single universally accepted basic accounting theory exists.
False
What are the conditions for accounting?
1) Existence of a need for information for decision making
2) Development of means, tools & techniques for satisfying decision making needs.
Fill in the blank: Accounting information is ______ relevant.
value
What are the two main components for the development of means, tools, and techniques in accounting?
1) Literacy
2) Efficient Numbering systems
How does accounting evolve?
Accounting evolves as society evolves, reacting to society’s need for information.
List major historical events that have influenced accounting.
- Ancient Civilizations
- Middle Ages
- Renaissance Period
- Industrial Revolution
- Stock Market Crash
- Technology Bubble
- Internet Accessibility
- Enron
- Market Collapse
- Global Harmonization
- Performance Measurement
What is double entry bookkeeping?
The foundation for accounting today that recognizes two sides to each transaction.
Who is known for the treatise on mathematics that included double entry bookkeeping?
Brother Luca Pacioli
What were some early forms of business organization?
- Partnerships
- Corporations
- Joint stock companies
What act required audits for joint stock companies in the 19th century?
Joint Stock Companies Act of 1844
What did the Securities Act of 1934 focus on?
Protection of investors and required audited financial statements.
What is GAAP?
Generally Accepted Accounting Principles.
What year did the CICA adopt IFRS?
2011
True or False: The SEC was established after the stock market crash of 1929.
True
What major change occurred in accounting standards after 2011?
The adoption of IFRS and ASPE.
Fill in the blank: The merger of accounting professions led to the formation of ______.
Chartered Professional Accountant (CPA)
What was a major focus of the accounting profession in the 21st century?
Increased regulation and auditor litigation.
What technology has influenced accounting practices in recent years?
XBRL and the internet.
