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Principles of Accounting: Chapter 1 > Chapter 1: Accounting and the Business Environment > Flashcards

Chapter 1: Accounting and the Business Environment Flashcards

1
Q

the information system that measures business activities, processes the information into reports, and communicates the results to decision makers.

A

Accounting

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2
Q

Name the 2 major fields of accounting

A

Financial Accounting & Managerial Accounting

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3
Q

The field of accounting that focuses on providing information for external decision makers

A

Financial Accounting

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4
Q

Focuses on information for internal decision makers, such as the company’s managers and employees

A

Managerial Accounting

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5
Q

IFRS stands for:

A

International Financial Reporting Standards

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6
Q

Any person or business to whom a business owes money

A

Creditor

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7
Q

CPA stands for

A

Certified Public Accountants

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8
Q

Licensed professional accountants who serve the general public

A

CPA(Certified Public Accountants)

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9
Q

CMA stands for:

A

Certified Management Accountants

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10
Q

certified professional who specialize in accounting and financial management knowledge. They typically work for a single company

A

CMA (Certified Management Accountants)

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11
Q

Certified accountants general make how much more than their non-certified colleagues?

A

10 - 15%

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12
Q

FASB stands for:

A

Financial Accounting Standards Board

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13
Q

Privately funded organization, who oversees the creation and governance of accounting standards

A

FASB (Financial Accounting Standards Board)

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14
Q

The FASB works with which governmental regulatory agency

A

Securities and Exchange Commission (SEC)

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15
Q

US government agency that oversees the US financial markets

A

Securities and Exchange Commission (SEC)

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16
Q

Accounting guidelines, currently formulated by the Financial Accounting Standards Board, the main U.S. accounting rule book

A

Generally Accepted Accounting Principles (GAAP)

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17
Q

An organization that stands apart as a separate economic unit

A

Economic Entity Assumption

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18
Q

A business can be organized as a:

A

Sole Proprietorship, Partnership, Corporation, or Limited Liability Company (LLC)

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19
Q

A business with a single owner

A

Sole Proprietorship

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20
Q

A business with two or more owners and not organized as a corporation

A

Partnership

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21
Q

A business organized under state law that is a separate legal entity

A

Corporation

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22
Q

A company in which each member is only liable for his or her own actions

A

Limited Liability Company

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23
Q

A principle that states that acquired assets and services should be recorded at their actual cost

A

Cost Principle (Historical cost)

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24
Q

Assumes that the entity will remain in operation for the foreseeable future

A

Going Concern Assumption

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25
Q

Rise in the price level

A

Inflation

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26
Q

The assumption that requires the items on the financial statements to be measured in terms of a monetary unit

A

Monetary Unit Assumption

27
Q

IFRS stands for:

A

International Financial Reporting Standards

28
Q

A set of global accounting guidelines, formulated by the International Accounting Standards Board (IASB)

A

International Financial Reporting Standards (IFRS)

29
Q

The IFRS is a set of global accounting standards that are used/required in how many nations?

A

120 nations

30
Q

IASB stands for:

A

International Accounting Standards Board

31
Q

The current timeline shows that reporting under IFRS could start as early as:

A

2015 or 2016

32
Q

an examination of a company’s financial statements and records

A

Audit

33
Q

Requires companies to review interna control and take responsibility for the accuracy and completeness of their financial reports

A

Sarbanes-Oxley Act (SOX)

34
Q

The Sarbanes-Oxley At created which new watchdog agency to monitor the work of independent accountants who audit public companies?

A

Public Company Accounting Oversight Board (PCAOB)

35
Q

The basic tool of accounting, measuring the resources of the business (what the business owns or has control of) and the claims to those resources (what the business owes to creditors and to the owner). Assets=Liabilities + Equity

A

Accounting Equation

36
Q

What is the accounting equation?

A

Assets=Liabilities + Equity

37
Q

Economic resources that are expected to benefit the business in the future. Something the business owns or has control of

A

Assets

38
Q

Example of an asset:

A

Cash, land, merchandise, furniture, inventory, etc.

39
Q

Debts that are owed to creditors

A

Liabilities

40
Q

The owner’s claim to the assets of the business

A

Equity

41
Q

Owner contributions to a business

A

Owner’s Capital

42
Q

Amounts earned from delivering goods or services to customers

A

Revenues

43
Q

The cost of selling goods or services

A

Expenses

44
Q

Payments of equity to the owner

A

Owner’s Withdrawals

45
Q

The result of operations that occurs when total revenues are greater than total expenses

A

Net Income

46
Q

The result of operations that occurs when total expenses are greater than total revenues

A

Net Loss

47
Q

An event that affects the financial position of the business and can be measured reliably in dollar amounts

A

Transaction

48
Q

A short-term liability that will be paid in the future

A

Accounts Payable

49
Q

The right to receive cash in the future from customers for goods sold or for services performed

A

Accounts Receivable

50
Q

Business documents that are used to communicate information needed to make business decisions

A

Financial Statements

51
Q

Reports the net income or net loss of the business for a specific period

A

Income Statement

52
Q

Shows the changes in the owner’s capital account for a specific period

A

Statement of Owner’s Equity

53
Q

Reports on the assets, liabilities, and owner’s equity of the business as of a specific date

A

Balance Sheet

54
Q

Reports on a business’s cash receipts and cash payments for a specific period

Answers the question of whether the business generates enough cash to pay its bills

A

Statement of Cash Flows

55
Q

Presents a summary of business entity’s revenues and expenses for a period of time (month, quarter, year)

A

Statement of Earnings

56
Q

Which two types of accounts are reported on the income statement?

A

Revenues and Expenses

57
Q

Shows the changes in capital for a business entity during a time period (month, quarter, year)

A

Owner’s Equity Statement

58
Q

Lists a business entity’s assets, liabilities, and owers equity as of a specific date, usually the end of a month, quarter, or yar

A

Balance Sheet (Statement of financial positions)

59
Q

Reports the cash coming in (positive amounts) and the cash going out (negative amounts) during a period

A

Statement of Cash Flow

60
Q

Which 3 sections is the cash flows divides into?

A

Operating, Investing, and Financing

61
Q

Involve cash receipts for services provided and cash payments for expenses paid

A

Operating Activities

62
Q

the purchase and sale of land and equipment for cash

A

Investing Activities

63
Q

Cash contributions by the owner and withdrawals of cash by the owner

A

Financing Activities

Principles of Accounting: Chapter 1 (1 decks)

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