chapter 1 Flashcards
five main activities involved in accounting
- Gathering financial information about the activities of the business
- Preparing and collecting permanent records
- Rearranging analyzing, summering and classifying financial information
- Preparing information reports and summaries for the management to make decisions, for bankers and investors and measure profitability of business
- Establishing controls to promote accuracy and honesty among employees
who would benefit from the accounting system?
Owners and managers
Investors and bankers
Explain how knowledge of accounting can help people who won their own businesses
- They will be able to handle things like banking
- How to keep track of amounts owed to suppliers and customers
- Keeping accounting records for government
- Payroll accounting
- To produce income statements and balance sheets
what is a public accountant
they give service to the public with a fee, like lawyers
what is auditing
It is when a outside person who does not work for the company goes over the companies records to see if they are genuine and legit
three types of business and explain what they are
- manufacturing - Buys raw materials, converts them into new products and profits from them
- merchandise - Buying goods and reselling them for a higher price for profit
- non profit organization - Organizations set up to not profit them but not donate to a cause
- service business - a company that offers an intangible item that is typically provided by a person or employees of an organization.
three forms of business ownership
- sole proprietorship - running a business by yourself
- partnership - running a business with two or more people
- corporation - many people running it, owned by multiple shareholders
routine accounting activity and a periodic accounting activity
This involves recording day-to-day financial activities like sales, purchases, receipts, and payments. This is typically done at the end of a specific period, such as quarterly or annually. For example, creating a balance sheet or income statement at the end of the fiscal year is a periodic activity. These tasks happen less frequently but are essential for assessing the overall financial health of the business.
Define the accounting cycle
The accounting cycle is a collective process of identifying, analyzing, and recording the accounting events of a company. It is a standard 8-step process that begins when a transaction occurs and ends with its inclusion in the financial statements and the closing of the books.
three professional accounting organizations
Canadian institute of chartered accountants (CA)
Certified general accountant association of Canada (CGA)
Society of management accountants of canada (GMA)
what is the CICA and what does it stand for
it stands for Canadian institute of chartered accountant, Their handbook is used to set standards and rules for all accounting organizations in canada
What is a CPA, what does it stand for, when did the CPA form
Chartered Professional Accountant is the professional designation which united the three Canadian accounting designations that previously existed: Chartered Accountant (CA), Certified General Accountant (CGA) Certified Management Accountant (CMA). these merged in 2014.
What does AcSB, IFRS, GAAP
International Financial Reporting Standards
generally accepted accounting principles
Accounting Standards Board
what is GAAP, AcSB, and IFRS
AcSB serve the public interest by establishing standards for financial reporting by all Canadian private sector entities and by contributing to the development of internationally accepted financial reporting standards. GAAP are a set of accounting rules, standards, and procedures issued and frequently revised by the Financial Accounting Standards Board (FASB). International Financial Reporting Standards (IFRS) are a set of accounting rules for the financial statements of public companies that are intended to make them consistent, transparent, and easily comparable around the world.
how are GAAP, AcSB, and IFRS all diiferent
AcSB is similar to the IFRS but only private entities are allowed to follow the acsb however also have the choice of IFRS. The IFRS and GAAP are different becuase GAAP is mostly used in the USA while IFRS is used in over 140 countries. Also, IFRS is more principle based while GAAP is rules based
