Ch. 1 Ethics Flashcards
ethics
the moral principles that guide the conduct of individuals
what influences ethical behavior?
individual character and firm culture
individual character
honesty, integrity, fairness in the face of pressure to hide the truth
firm culture
the behavior and attitude of senior management. the tone at the top flows down
5 fields of accounting
financial, managerial, tax, auditing, fraud
financial accounting
records and reports economic data and activities for a business
managerial accounting
uses financial accounting and estimates to help management run a business, planning for the future, and analyzing the past
private accounting
the field of accounting whereby accountants are employed by a business firm or a not-for-profit organization
public accounting
the field of accounting where accountants and their staff provide services on a fee basis
GAAP (generally accepted accounting principles)
a collection of accounting standards, principles, and assumption that define how financial information is reported
monetary unit assumption
requires financials to be expressed in single currency (ex. US dollar, Euros
time period assumption
allows a company to report its economic activities on a regular basis (ex. annual reporting)
business entity assumption
business is viewed as a separate entity from owners, creditors, and other businesses (ex. LLC)
going concern assumption
requires that financial reports be reported assuming the business will continue operating
measurement principle
determines the amount that will be recorded and reported
historical cost principle
transactions are recorded at the initial transaction price and do not normally change until another transaction occurs
revenue recognition principles
determines when revenue is recognized, usually when service has been performed or product delivered to customer
expense recognition principle
requires that expenses be recorded in the same year as the related revenue
