Chapter 1 Flashcards
_________ is a service activity.
Accounting
to provide quantitative information that is primarily financial in nature, about economic entities, intended to be useful in making
economic decisions
Function of Accounting
An ___________ provides services and
furnishes quantitative information expressed in terms of money that is useful to the users of the
accounting information.
accountant
The information is outlined into reports called ______________ and
served as a basis for making important economic decisions.
financial statements
The users of the accounting information are categorized as either
internal or external
Branches of Accounting
Management Accounting
Financial Accounting
Areas of Accounting
Public, Private, Government, Accounting In Education
_________________ are decision makers who have no direct access to the information provided
by the operations of the company.
External users
____________________ represent the managers or the decision makers
of an entity and they need the accounting information for the continued operation of their
business.
Internal users
________ are influenced with the returns from their investments and to decide whether
to make additional investments, hold or sell their shares of stocks.
Investors
______,______,________ need accounting information to help in their decision
whether to extend credit or loans being applied by businesses.
Suppliers, Lenders, Creditors
Accounting is based on a double entry system which means that a business transaction
has a dual effect when recorded.
True
Business transactions are recorded in at least ____ accounts.
two
are needed to serve as a basis for recording the transactions.
Documents
The two books of
accounts, where transactions are recorded, are
the journal and ledger
The double-entry
accounting system has specific rules of debit and credit for recording the transactions in the
accounts. _______ is the left side of an account while ________is the right side.
debit, credit
transactions are first recorded in the book of
original entry called the general journal and the process is known as
journalizing
The ___________ should show the elements of the financial statements which shall be used in recording
the transactions.
chart of
accounts
_____________ are sometimes used by businesses that are designed for
recording a single type of transaction that occurs frequently.
Special journals
The format and the number of
special journals used will depend on the nature of the business.
True
The most common special
journals include the
cash payment, cash receipt, purchase and sales journal
The __________________ will be used for entries that cannot be recorded in the
special journals such as adjusting and closing entries.
general journal
