Ch 1 - Accounting, The Lang of Bus VOCAB

Question 1

Define accounting. (8)

Answer 1

1. process by which financial information about a business is recorded,
2. classified
3. summarized,
4. interpreted, and
5. communicated to
6. owners,
7. managers and
8. other interested parties

Question 2

Define accounting system. (3)

Answer 2

process designed to

1. accumulate
2. classify
3. summarize financial data

Question 3

Define auditing.

Answer 3

review of financial statements to assess their fairness and adherence to GAAP

Question 4

Define auditor’s report.

Answer 4

independent accountant’s review of a firm’s financial statements

Question 5

Define certified public accountant (CPA)

Answer 5

independent accountant who provides accounting services to public for a fee

Question 6

Define corporation. (3)

Answer 6

1. publicly or privately owned business entity that is separate from its owners and
2. has a legal right to own property and do business in its own name
3. stockholders are not responsible for debts or taxes of business

Question 7

Define creditor.

Answer 7

one to whom money is owed

Question 8

Define discussion memorandum.

Answer 8

explanation of a topic under considerations by Financial Accounting Standards Board

Question 9

Define economic entity.

Answer 9

business or org whose major purpose is to produce a profit for its owners

Question 10

Define entity. (5)

Answer 10

1. anything having its own separate identity
2. individual
3. town
4. university
5. business

Question 11

Define exposure draft.

Answer 11

proposed solution to a problem being considered by the Financial Accounting Standards Board

Question 12

Define financial statements.

Answer 12

periodic reports of a firm’s financial position or operating results

Question 13

Define generally accepted accounting principles (GAAP)

Answer 13

accounting standards developed and applied by professional accountants

Question 14

Define governmental accounting.

Answer 14

accounting work preformed for a federal, state or local governmental unit

Question 15

Define international accounting.

Answer 15

study of accounting principles used by different countries.

Question 16

Define management advisory services.

Answer 16

services designed to help clients improve their information systems or their business performance

Question 17

Define managerial accounting.

Answer 17

accounting work carried on by an accountant employed by a single business or industry

Question 18

Define partnership.

Answer 18

business entity owned by two or more people who are legally responsible for the debts and taxes of the business

Question 19

Define public accountants.

Answer 19

members of firms that perform accounting services for other companies

Question 20

Define separate entity assumption.

Answer 20

concept of a keeping a firm’s financial records separate from the owner’s personal financial records

Question 21

Define social entity.

Answer 21

a nonprofit org

Question 22

Define sole proprietorship.

Answer 22

business entity owned by one person who is legally responsible for debts and taxes of the business

Question 23

Define Statements of Financial Accounting Standards.

Answer 23

accounting principles established by the Financial Accounting Standards Board.

Question 24

Define stock.

Answer 24

certificates that represents ownership of a corp

Question 25

Define stockholders.

Answer 25

owners of a corp, also called shareholders

Question 26

Define tax accounting.

Answer 26

service that involves tax compliance and tax planning