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Acct 101 > Chapter 1 > Flashcards

Chapter 1 Flashcards

1
Q

Financial Accounting has info about…

A

The financial resources, obligations, and activities of an economic entity

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2
Q

Financial Accounting info is used by…

A

External users, like creditors and investors

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3
Q

Financial Position

A

The businesses’ financial obligations + resources at some point

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4
Q

Results of operations

A

The businesses’ financial activities over a period of time

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5
Q

The purpose of financial accounting is to…

A

Allow creditors + investors to determine where to invest their capital

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6
Q

Managerial Accounting info is used by…

A

The internal management

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7
Q

The purpose of managerial accounting is…

A

Assist management in business operations

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8
Q

An information system consists of ____________ used by an organization to develop + communicate info to decision makers

A

The people, procedures, tech, and records

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9
Q

The purpose of an information system is to…

A

Get the info to the organization asap

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10
Q

Income tax regulations require businesses to…

A
  • Measure their taxable income
  • Explain the stuff in their tax returns
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11
Q

The basic functions of an info system are…

A
  1. Interpret + record the effects of business transactions
  2. Classify totals + subtotals
  3. Summarize + communicate info
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12
Q

Internal Control

A

Provides assurance that the business runs smoothly

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13
Q

The 5 components of internal control are…

A
  1. Control Environment
  2. Risk Assessment
  3. Control Activities
  4. Info + communication
  5. Monitoring Activities
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14
Q

Control Environment

A

The foundation of internal control

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15
Q

An ineffective control environment results in…

A

Fraudulent financial reporting

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16
Q

Risk Assessment

A

Identify, analyze, and manage potential risks to the business

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17
Q

Control Activities

A

The policies + procedures placed to address identified risks

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18
Q

Info + communication

A

Developing info systems that capture + communicate business info

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19
Q

Monitoring Activities

A

Evaluating the effectiveness of the businesses’ internal control

20
Q

Sarbanes-Oxley Act (2002) requires…

A

Public companies + the auditor to issue an annual report about their internal control

21
Q

External Users

A

People interested in, but not apart of, the daily operations of a business

Aka mainly creditors and investors

22
Q

Cash Flow Prospects

A

The odds of the investor getting a return on + of their investment

23
Q

Return of investment

A

The repayment of the original investment from a different enterprise

24
Q

Return on investment

A

The additional payment from using someone else’s funds

25
Q

The 3 tiers of objectives of financial accounting are…

A
  1. For specific stuff
  2. For assessing cash flows
  3. For investment + credit decisions
26
Q

Financial Statement

A

A declaration of factual info in money terms that represents the businesses’ financial activities

They’re usually filled out annually, @ the end of the year

27
Q

Interim Financial statements

A

Financial statements that are prepared for periods of time shorter than 1 year

28
Q

The 3 primary financial statements are…

A
  • Balance Sheet (aka the statement of financial position)
  • Income Statement (aka the profit-loss statement)
  • Statement of Cash Flows
29
Q

The balance sheet shows…

A

Where the company stands in financial terms w/ its assets, liabilities and owners equity

30
Q

The income statement shows…

A

Details + results of the company’s profit-related activities

31
Q

The statement of cash flows shows…

A

The details of a company’s cash activities

This is important to creditors and investors

32
Q

Externally reported financial info is generally ________ in nature

A

Historical

This info is from the past that’s used to access the future of a business

33
Q

Most of externally reported financial info is based on…

A

Estimates, judgements, and assumptions about both the past and future

Can cause financial info to be misunderstood

34
Q

General-purpose info

A

Info intended for multiple groups of people

“one size fits all”

35
Q

What is used to help explain financial info?

A

Financial notes, which serve as explanations to the numbers

36
Q

Internal decision makers (management) make + utilize internal accounting info for…

A
  • Exclusive use inside the organization
  • External decision users to use
37
Q

What are considered as corporate secrets?

A
  • Long range plans
  • Research & development results
  • Capital budget details
  • Competitive Strats, presumably against other companies
38
Q

Internal users

A

Organization members, like employees & higher ups (owners, CEOs, supervisors)

39
Q

Database warehouses + user friendly software = ?

A
  • Easily accessible info
  • Creation of useful financial reports
40
Q

Many enterprises have a _______ that describes their goals + objectives

A

Mission statement

41
Q

Comparing the plan or budget to the actual outcome for an accounting period creates a signal about…

A

The performance of the employee responsible for that budget

42
Q

The objectives of accounting systems begins at…

A

The objectives and missions of the enterprise

43
Q

The processes for creating external financial reports determines…

A

The type of info available for internal decision making

44
Q

Why must accounting info be created + communicated in a timely manner?

A
  • Because the competitive environment demands it
  • To be able to plan + control ongoing business processes
45
Q

The creation of accounting info allows management to…

A

Make future decisions that are in the best interest of the enterprise’s goals

46
Q

An assessment of how effective management is in achieving their mission can be made by…

A

Comparing their resource inputs with their competitor’s outputs

47
Q

Integrity

A

True, complete, and honest

Acct 101 (1 decks)

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