Chapter 1 Intro to Accounting Flashcards
The purpose of accounting is to provide financial information about the current operations and financial conditions of a business to
individuals, agencies and organizations
Accounting is a system of gathering financial information about a business and
reporting this information to users.
The six major steps of the accounting process are
analyzing, recording, classifying, summarizing, reporting and interpreting.
is looking at events that have taken place and thinking about how they affect the business.
analyzing
is entering financial information about events into the accounting system.
Recording
is sorting and grouping similar items together rather merely keeping a simple, diary-like record of numerous events.
Classifying
is the aggregation of many similar events to provide information that is easy to understand.
Summarizing
is telling the results. In accounting, it is common to use tables of numbers to report results.
Reporting
is deciding the meaning and importance of the information in various reports.
Interpreting
It has the power to require these firms to follow certain rules when preparing their financial statements.
generally accepted accounting principles(GAAP)
the issue is placed on agenda
FASB
After researching an issue, FASB issues a
Preliminary View
To gather additional views on the issue, the Board will often hold around the country
public hearings
Following these hearings, the Board issues an
exposure draft.
After considering feedback on the exposure draft, the Board issues a final, which amends the
Accounting Standards Update, Financial Accounting Standards Board Accounting Standard Codification
one owner
Sole Proprietorship
two or more partners
partnership
stockholders
corporations
A business that provides service is called
service business
A business that buys a product from another business to sell to customers is called
merchandising business
A business that make product to sell
manufacturing business
Services focused on tax, planning
Tax accounting
preparing tax returns and dealing with the IRS and other governmental agencies
taxation
