Chapter 1-2

Question 1

Accountant

Answer 1

Accountants make business decisions, prepares, and interprets financial reports. Higher level position.

Question 2

Profit vs. Not for Profit

Answer 2

For profit businesses work to make money for the owners while not for profit businesses works to protect and preserve the environment by balancing their income with their expenses. Often times not for profits are designed to do some sort of good like charity.

Question 3

Accounting Clerk

Answer 3

An entry level position that often performs one or two accounting tasks. One or two departments and day to day work.

Question 4

CPA

Answer 4

Certified public accountant. Must past a national test(CPA exam) and meet experience and education requirements. Masters degree. 3 years working in public accounting.

Question 5

Public Accounting

Answer 5

Provide accounting services to their clients

Question 6

Big Four

Answer 6

4 major public accounting firms, PricewaterhouseCoopers, Deloitte and Touche, Ernst and Young, and KPMG

Question 7

Free Enterprise

Answer 7

People are free to produce the goods and services they choose. Capitalism.

Question 8

Profit

Answer 8

The amount of money earned over the money spent to keep the business going

Question 9

Loss

Answer 9

Spent money more then they earn

Question 10

Entreprenuer

Answer 10

People who transform ideas for products or services into real-world businesses

Question 11

Capital

Answer 11

Money supplied by investors, banks, or owners of a business

Question 12

Service

Answer 12

Provides a needed service for a fee

Question 13

Merchandising

Answer 13

Buys finished products and resells them to individuals or businesses

Question 14

Manufactoring

Answer 14

Buys raw materials and transforms them into finished products through the use of labor and capital then sells them to individuals or other businesses

Question 15

Sole Proprietorship

Answer 15

A business owned by one person

Question 16

Partnership

Answer 16

A business owned by two or more people called partners, who agree to operate the business as co-owners

Question 17

Corporation

Answer 17

A business organization that is recognized by law tohave a life of its own. Must get permission from the state to operate.

Question 18

Charter

Answer 18

Legal permission by the state to operate a corporation. Gives a corporation certain rights and privileges.

Question 19

Shareholder

Answer 19

Legal owners of a corporation. Also called stock-holders.

Question 20

Manual vs. Computerized Accounting

Answer 20

Manual is accounting information processed by hand. Computer is financial information being recorded by computer

Question 21

GAAP

Answer 21

Generally accepted accounting principles. A set or rules all accountants use to prepare their reports

Question 22

Financial Reports

Answer 22

Summarized information about the financial status of a business. 2 most widely used financial statements are the balance sheet and the income statement.

Question 23

Financial Accounting

Answer 23

Focuses on reporting information to external users.(Scorekeeping). Creates information for external users. External users are banks, government, unions, investors

Question 24

Managerial Accounting(Cost Accounting)

Answer 24

Focuses on reporting information the management referred to as accounting for internal users. Managers use info for purchasing, hiring, production, sales

Question 25

Business Entity

Answer 25

Exists independently of its owners personal assets in terms of accounting. Accounting Assumption.

Question 26

Accounting Period

Answer 26

A period of time covered by an accounting report. Monthly, quarterly, yearly. Accounting Assumption.

Question 27

Going Concern

Answer 27

Accountants assume that a business has the ability to survive and operate indefinitely. A business is expected to continue as a going concern.. Accounting Assumption.