Chap 1

Question 1

Accounting

Answer 1

The process by which financial info about a business is recorded, classified, summarized, interpreted, and communication to owners, manager, and other interested parties.

Question 2

Accounting Standards Codification

Answer 2

the source of authoritative US GAAP

Question 3

Accounting Standards Update

Answer 3

changes to Accounting Standards Codification are communicated through Accounting Standards Update covering approx. 90 topics.

Question 4

Accounting System

Answer 4

a process designated to accumulate, classify, and summarize financial data.

Question 5

Auditing

Answer 5

the review of financial statements to assess their fairness and adherence to generally accepted accounting principles.

Question 6

Auditor’s Report

Answer 6

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

Question 7

Certified Bookkeeper

Answer 7

a designation that assures an individual possesses the level of knowledge and skill needed to carry out all key functions though the adjusted trial balance, including payroll.

Question 8

Certified Public Account

Answer 8

an independent accountant who provides accounting services to the public for a fee.

Question 9

Corporation

Answer 9

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

Question 10

Creditor

Answer 10

one to whom money is owed

Question 11

Discussion Memorandum

Answer 11

an explanation of topic under consideration by the Financial Accounting Standards Board.

Question 12

Economic Entity

Answer 12

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

Question 13

Entity

Answer 13

anything having its own separate identity, such as an individual, town, university, or business.

Question 14

Exposure Draft

Answer 14

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

Question 15

Financial Statements

Answer 15

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

Question 16

Fraud

Answer 16

intentional or reckless acts that result in confiscation of a firm’s assets or the misrepresentation of the firm’s accounting data.

Question 17

Generally accepted accounting principles

Answer 17

GAAP; accounting standards developed and applied by professional accountants.

Question 18

Governmental accounting

Answer 18

accounting work performed for a federal, state or local governmental unit.

Question 19

Internal control

Answer 19

a company’s policies and procedures to safeguard assets, ensure reliability of accounting data, and promote compliance with management policies and applicable laws.

Question 20

International accounting

Answer 20

the study of accounting principles used by different countries.

Question 21

Management advisory services

Answer 21

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

Question 22

Managerial accounting

Answer 22

accounting work carried on by an accountant employed by a single business in industry; the branch of account that provides financial information about business segments, activities, or products.

Question 23

Partnership

Answer 23

a business entity owned by two or more people who carry on a business for profit and who are legal responsible for the debts and taxes of the business.

Question 24

Public accountants

Answer 24

members of firms that perform accounting services for other companies.

Question 25

Separate entity assumption

Answer 25

the concept that a business is separate from its owners; the concept of keeping a firm’s financial records separate from the owner’s personal financial records.

Question 26

Social entity

Answer 26

a nonprofit organization, such as a city, public school, or public hospital.

Question 27

Sole proprietorship

Answer 27

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

Question 28

Statement of Financial Accounting Standards

Answer 28

accounting principles established by the Financial Accounting Standards Board.

Question 29

Stock

Answer 29

certificates that represent ownership of a corporation.

Question 30

Stockholders

Answer 30

the owners of a corporation; also called shareholders.

Question 31

Tax accounting

Answer 31

a service that involves tax compliance and tax planning.