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ACCT201 > CH1 - Intro to Accounting and Business > Flashcards

CH1 - Intro to Accounting and Business Flashcards

0
Q

What makes accounting information reliable?

A

If it is dependable and free from error or bias.

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1
Q

Three Objectives of Accounting

A
  1. Help users make investment and credit decisions 2. Helps users determine risk 3. Informs users about the economic resources of and claims against the enterprise
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2
Q

Difference between financial accounting and managerial accounting?

A

Financial accounting primarily serves the needs of investors and creditors. Managerial accounting serves the needs of internal constituents -managers and staff- and helps support their decision making

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3
Q

Four primary financial statements?

A

Balance sheet, income statement, statement of changes in equity, and statement of cash flow

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4
Q

The Accounting Equation

A

Assets = Liabilities + Owner’s Equity

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5
Q

Assets

A

A company’s resources - things the company owns

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6
Q

Examples of Assets

A

Cash, accounts receivable, inventory, land, investments, equipment, buildings

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7
Q

Liabilities

A

A company’s obligations - amounts the company owes

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9
Q

The Balance Sheet is also known as?

A

Statement of financial position

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10
Q

GAAP

A

Generally Accepted Accounting Principals

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11
Q

GAAS

A

Generally Accepted Auditing Standards

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12
Q

The Accounting Cycle - Step 1

A
  1. Identify and gather transaction information
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13
Q

The Accounting Cycle - Step 2

A

Analyze and Journalize Transactions

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14
Q

The Accounting Cycle - Step 3

A

Post to ledgers

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15
Q

The Accounting Cycle - Step 4

A

Prepare unadjusted trial balance

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16
Q

The Accounting Cycle - Step 5

A

Make adjustments

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17
Q

The Accounting Cycle - Step 6

A

Prepare financial statements

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18
Q

The Accounting Cycle - Step 7

A

Close the books

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19
Q

A snapshot of a company’s financial position at a particular point in time

A

The Balance Sheet

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20
Q

Examples of liabilities

A

Accounts payable, salaries and wages payable, interest payable, income taxes payable

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21
Q

Account Form

A

The form of balance sheet that resembles the basic format of the accounting equation

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22
Q

Account Payable

A

The liability created by a purchase on account

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23
Q

Account Receivable

A

A claim against the customer created by selling merchandise or services on credit

24
Q

Accounting

A

An information system that provides reports to stakeholders about the economic activities and condition of a business

25
Q

Balance Sheet

A

A list of the assets, liabilities, and owner’s equity as of a specific date, usually at the close of the last day of a month or a year

26
Q

Business

A

An organization in which basic resources (inputs), such as materials and labor, are assembled and processed to provide goods or services (outputs) to customers

27
Q

Business Entity Concept

A

A concept of accounting that limits the economic data in the accounting system to data related directly to the activities of the business

28
Q

Certified Public Accountant (CPA)

A

Public accountants who have met a stat’es education, experience, and examination requirements

29
Q

Corporation

A

A business organized under state or federal statutes as a separate legal entity

30
Q

Cost Concept

A

A concept of accounting that determines the amount initially entered into the accounting records for purchases

31
Q

Earnings

A

The amount by which revenues exceed expenses

32
Q

Expenses

A

Assets used up or services consumed in the process of generating revenues

33
Q

Fees Earned

A

Revenue from providing services

34
Q

Financial Accounting

A

The branch of accounting that is concerned with recording transactions using GAAP for a business or other economic unit and with a periodic preparation of various statements from such records

35
Q

Financial Accounting Standards Board (FASB)

A

The authoritative body that has the primary responsibility for developing accounting principles

36
Q

Generally Accepted Accounting Principals (GAAP)

A

Generally accepted guidelines for the preparation of financial statements

37
Q

General-purpose Financial Statements

A

A type of financial accounting report that is distributed to external users.

38
Q

Interest Revenue

A

Money received for interest

39
Q

International Accounting Standards Board (IASB)

A

An organization that issues International Financial Reporting Standards for many countries outside the United States

40
Q

Limited Liability Company (LLC)

A

A business form consisting of one or more persons or entities filing an operating agreement with a state to conduct business with limited liability to the owners, yet treated as a partnership for tax purposes

41
Q

Managerial Accounting

A

The branch of accounting that uses both historical and estimated data in providing information that management uses in conducting daily operations, in planning future operations, and in developing overall business strategies

42
Q

Matching Concept

A

A concept of accounting in which expenses are matched with the revenue generated during a period by those expenses

43
Q

Net Income (Net Profit)

A

The amount by which revenues exceed expenses

44
Q

Objectivity Concept

A

A concept of accounting that requires accounting records and the data reported in financial statements to be based on objective evidence

45
Q

Partnership

A

An unincorporated business form consisting of two or more persons conducting business as co-owners for profit

46
Q

Private Accounting

A

The field of accounting whereby accountants are employed by a business firm or a not-for-profit organization

47
Q

Profit

A

The difference between amount received from customers and amount paid to provide services to customers

48
Q

Proprietorship

A

A business owned by one individual

49
Q

Public Accounting

A

The field of accounting where accountants and their staff provide services on a fee basis

50
Q

Public Company Accounting Oversight Board (PCAOB)

A

A new oversight body for the accounting profession that was established by the Sarbanes-Oxley Act

51
Q

Ratio of Liabilities to Owner’s Equity

A

A comprehensive leverage ratio that measures the relationship of the claims of creditors to stockholders’ equity

52
Q

Revenue

A

Increase in owner’s equity as a result of selling services or products to customers

53
Q

Sales

A

The total amount charged customers for merchandise sold, including cash sales and sales on account

54
Q

Sarbanes-Oxley Act (SOX)

A

An act passed by Congress to restore public confidence and trust in the financial statements of companies

55
Q

Securities and Exchange Commission (SEC)

A

An agency of the U.S. Government that has authority and financial disclosures for companies whose shares of ownership (stock) are traded and sold to the public

56
Q

Unit of Measure Concept

A

A concept of accounting requiring that economic data be recorded in dollars

ACCT201 (12 decks)

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