Chapter 1: Introduction Flashcards
1
Q
account form (balance sheet)
A
The form of balance sheet that resembles the basic format of the accounting equation, with Assets on the left side and Liabilities and Owner’s Equity sections on the right side.
2
Q
account payable
A
The liability created by a purchase on account.
3
Q
account receivable
A
A claim against the customer created by selling merchandise or services on account.
4
Q
accounting
A
An information system that provides reports to users about the economic activities and condition of a business.
5
Q
accounting equation
A
Assets = Liabilities + Owner’s Equity
6
Q
Accounting Standards Board (AcSB)
A
The authoritative body of the CICA that has the primary responsibility for approving and developing accounting standards in Canada.
7
Q
Accounting Standards for Private Enterprise (ASPE)
A
The guidelines that constitute Part II of the CICA Handbook, which private enterprises may choose to use for the preparation of financial information.
8
Q
asset
A
An economic resource controlled by an entity as a result of a past transaction and from which future eco-nomic benefit may be obtained.
9
Q
balance sheet
A
A list of the assets, liabilities, and owner’s equity as at a specific date, usually at the close of the last day of a month or a year. Also known as statement of financial position under IFRS.
10
Q
benefit vs cost constraint
A
The trade-off that exists between the accuracy of financial information and the cost to produce that information. Also known as cost constraint.
11
Q
business
A
An organization in which basic resources (inputs), such as materials and labour, are assembled and processed to provide goods or services (outputs) to customers.
12
Q
business entity assumption
A
An assumption of accounting that limits the economic data in the accounting system to data related directly to the activities of the business.
13
Q
business transaction
A
An economic event or condition that directly changes an entity’s financial condition or directly affects its results of operations.
14
Q
Canadian generally accepted accounting principles (Canadian GAAP)
A
All of the Canadian accounting standards, including Accounting Standards for Private Enterprises (ASPF) and International Financial Reporting Standards (IFRS).
15
Q
Canadian Institute of Chartered Accountants (CICA)
A
A private organization that has primary responsibility for approving and developing accounting standards in Canada.
16
Q
cash flow statement
A
A summary of the cash receipts and cash payments for a specific period of time, such as a month or a year. Also known as Statement of cash flows under IFRS.
17
Q
Certified General Accountant (CGA)
A
An individual who has passed the professional examinations and practical experience requirements of the Certified General Accountants Association of Canada (CGA-Canada).
18
Q
Certified Management Accountant (CMA)
A
An individual who has passed the professional examinations and practical experience requirements of the Society of Management Accountants of Canada (CMA-Canada).
19
Q
Chartered Accountant (CA)
A
An individual who has passed the professional examinations and practical experience requirements of the Canadian Institute of Chartered Accountants (CICA).
20
Q
Chartered Professional Accountant (CPA)
A
An individual who has passed the Chartered Professional Accountants’ professional examinations and practical experience requirements.
21
Q
CICA Handbook
A
A document containing accounting standards and guidance for Canadian organizations, published by the Canadian Institute of Chartered Accountants.
22
Q
comparability
A
A preferred characteristic of accounting information whereby information for one company is comparable to information prepared for another organization.
23
Q
corporation
A
A business organized under provincial, territorial, or federal charter as a separate legal entity.
24
Q
cost constraint
A
The trade-off that exists between the accuracy of financial information and the cost to produce that information. Also known as benefit versus cost constraint.
25
cost principle
In financial statements, the recognition of transactions at the amount of cash paid or received. Also known as the historical cost basis.
26
ethics
Moral principles that guide the conduct of individuals.
27
expenses
Assets used up or services consumed in the process of generating revenues.
28
faithful representation
Recording an event in a manner that reflects the substance of the transaction. Also known as representational faithfulness.
29
fees earned
Revenue from providing services.
30
fees earned on account
Revenue from providing services when payment is received at a later date.
31
financial accounting
The branch of accounting that is concerned with recording transactions using generally accepted accounting principles (GAAP) for a business or other economic unit and with a periodic preparation of various statements from such records.
32
financial statements
Financial reports that summarize the effects of events on a business.
33
general-purpose financial statements
A type of financial accounting report that is distributed to external users. The term "general purpose" refers to the wide range of decision-making needs that the reports are designed to serve.
34
going concern assumption
An assumption that the business will continue for the foreseeable future.
35
historical cost basis
In financial statements, the recognition of transactions at the amount of cash paid or received. Also known as the cost principle.
36
income statement
A summary of the revenues and expenses for a specific period of time, such as a month or a year. (p. 16) Also known as statement of comprehensive income under IFRS.
37
interest revenue
Money received for interest.
38
International Accounting Standards Board (IASB)
An organization that issues International Financial Reporting Standards for many countries.
39
International Financial Reporting Standards (IFRS)
Guidelines, contained in Part I of the CICA Handbook for the preparation of financial statements for publicly accountable enterprises.
40
liability
An obligation to give up either services or assets.
41
management (or managerial) acccounting
The branch of accounting that provides accounting information for internal users' decision making.
42
manufacturing business
A business that changes basic inputs into products that are sold to customers.
43
materiality
Information is considered material if omitting it or misstating it could influence decisions that users make on the basis of financial information of an entity.
44
merchandising business
A business that purchases products from other businesses and sells them to customers.
45
net income
The amount by which revenues exceed expenses.
46
net loss
The amount by which expenses exceed revenues.
47
owner's equity
Assets less liabilities, being the amount that the owner is entitled to.
48
partnership
An unincorporated business form consisting of two or more persons conducting business as co-owners for profit.
49
prepaid expenses
Items such as supplies that will be used in the business in the future.
50
private accounting
The field of accounting whereby accountants are employed by a business or a not-for-profit organization.
51
private enterprises
Profit-oriented organizations that do not issue shares or bonds through stock exchanges.
52
profit
The difference between the amounts received from customers for goods or services provided and the amounts paid for the inputs used to provide the goods or services.
53
proprietorship
A business owned by one individual.
54
public accounting
The field of accounting where accountants and their staff provide services on a fee basis.
55
publicly accountable enterprises
Companies with shares or bonds listed on stock exchanges and other organizations, such as credit unions or investment dealers, that impact large or diverse groups of stakeholders.
56
purchase on account
Items purchased lier in the by agreeing to pay the supp near future.
57
relevance
Ability of financial information to be helpful to investors and others making financial decisions.
58
rent revenue
Money received for rent.
59
report form (balance sheet)
The form of balance sheet that presents the liabilities and owner's equity sections below the assets section.
60
representational faithfulness
Recording an event in a manner that reflects the substance of the transaction. Also known as faithful representation.
61
revenue recognition principle
Revenue transactions that meet the recognition criteria, normally recognized when goods are provided or services are performed.
62
revenues
Increases in owner's equity as a result of selling services or products to customers.
63
sales
The total amount charged customers for merchandise sold, including cash sales and sales on account.
64
sales on account
The amount charged customers for merchandise sold when payment is received at a later date.
65
service business
A business providing services rather than products to customers.
66
statement of cash flows
For companies reporting under IFRS, a summary of the cash receipts and cash payments for a specific period of time, such as a month or a year. Also known as cash flow statement.
67
statement of changes in equity
For companies reporting under IFRS, a summary of the changes in the owner's equity that have occurred during a specific period of time, such as a month or a year. Also known as statement of owner's equity and as statement of retained earnings for corporations reporting under ASPE.
68
statement of comprehensive income
For companies reporting under IFRS, a summary of the revenues and expenses for a specific period of time, such as a month or a year. Also known as income statement.
69
statement of financial position
For companies reporting under IFRS, a list of the assets, liabilities, and owner's equity as at a specific date, usually at the close of the last day of a month or a year. Also known as balance sheet.
70
statement of owner's equity
A summary of the changes in the owner's equity that have occurred during a specific period of time, such as a month or a year. Also known as statement of retained earnings for corporations reporting under ASPE, and as statement of changes in equity for corporations reporting under IFRS.
71
statement of retained earnings
For corporations reporting under ASPE, a summary of the changes in the owner's equity that have occurred during a specific period of time, such as a month or a year. Also known as statement of owner's equity and as statement of changes in equity for corporations reporting under IFRS.
72
timeliness
Ability of financial information to be produced on a timely basis so that it is helpful to investors and others making financial decisions.
73
understandability
Ability of information to improve the reader's comprehension of financial information, such as notes to the financial statements.
74
verifiability
A characteristic of financial information such that the information can be confirmed by source documents.
75
What is the role of accounting?
Accounting provides information managers use in operating their business. It also provides other with information for assessing the economic performance and condition of he business.
76
What are the 5 steps in the accounting process used to provide information?
1. Identify users.
2. Assess users' information needs.
3. Design the accounting information system to meet users needs.
4. Record economic data about business activities and events.
5. Prepare accounting reports for users.
77
The area of accounting that provides information to internal users, such as managers and employees, is called:
Managerial accounting or management accounting
78
The area of accounting that provides information to external users, such as shareholders, customers, creditors, and government, is called:
Financial accounting
79
What are three main types of businesses?
* Service businesses
* Merchandising businesses
* Manufacturing businesses
80
In what order are financial statements prepared?
* Income Statement
* Statement of Owner's Equity
* Balance Sheet
* Cash Flow Statement
81
What particular item of financial or operating data appears on both the income statement and the statement of owner's equity?
Net income
82
What particular item of financial or operating data appears on both the balance sheet and the statement of owner's equity?
Owner's capital
83
What particular item of financial or operating data appears on both the balance sheet and the cash flow statement?
Cash
84
What is the difference between an account payable and an account receivable.
An account receivable is a fee paid at a later date for services or products rendered, while an account payable is a payment at a later date for services or products received.
85
Why are GAAP used in preparing financial statements?
GAAP are used to ensure that information is reliable.
86
What are the fundamental characteristics of GAAP prepared financial information?
* Relevance
* Faithful representation
* Materiality
87
What are the enhancing characteristics of GAAP prepared financial information?
* Comparability
* Verifiability
* Timeliness
* Understandability
88
What are the two factors affecting ethical conduct?
* Failure of individual character
* Culture of greed and ethical indifference
89
What is the difference between private and public accounting?
Public accounts generally charge a fee, while private accountants are generally paid as employees.
90
What is the going concern assumption?
A going concern is a company that is expected to operate normally and financial statements should be prepared using the CICA Handbook.
91
What is the business entity assumption?
The business entity assumption limits the economic data in an accounting system to that which is directly related to the activities of the business.
92
# What does this define?
The form of balance sheet that resembles the basic format of the accounting equation, with Assets on the left side and Liabilities and Owner's Equity sections on the right side.
account form
93
# What does this define?
The liability created by a purchase on account.
account payable
94
# What does this define?
A claim against the customer created by selling merchandise or services on account.
account receivable
95
# What does this define?
An information system that provides reports to users about the economic activities and condition of a business.
accounting
96
# What does this define?
Assets = Liabilities + Owner's Equity
accounting equation
97
# What does this define?
The authoritative body of the CICA that has the primary responsibility for approving and developing accounting standards in Canada.
Accounting Standards Board (AcSB)
98
# What does this define?
The guidelines that constitute Part II of the CICA Handbook, which private enterprises may choose to use for the preparation of financial information.
Accounting Standards for Private Enterprise (ASPE)
99
# What does this define?
An economic resource controlled by an entity as a result of a past transaction and from which future eco-nomic benefit may be obtained.
asset
100
# What does this define?
A list of the assets, liabilities, and owner's equity as at a specific date, usually at the close of the last day of a month or a year. Also known as statement of financial position under IFRS.
balance sheet
101
# What does this define?
The trade-off that exists between the accuracy of financial information and the cost to produce that information. Also known as cost constraint.
benefit vs cost constraint
102
# What does this define?
An organization in which basic resources (inputs), such as materials and labour, are assembled and processed to provide goods or services (outputs) to customers.
business
103
# What does this define?
An assumption of accounting that limits the economic data in the accounting system to data related directly to the activities of the business.
business entity assumption
104
# What does this define?
An economic event or condition that directly changes an entity's financial condition or directly affects its results of operations.
business transaction
105
# What does this define?
All of the Canadian accounting standards, including Accounting Standards for Private Enterprises (ASPE) and International Financial Reporting Standards (IFRS).
Canadian generally accepted accounting principles (Canadian GAAP)
106
# What does this define?
A private organization that has primary responsibility for approving and developing accounting standards in Canada.
Canadian Institute of Chartered Accountants (CICA)
107
# What does this define?
A summary of the cash receipts and cash payments for a specific period of time, such as a month or a year. Also known as Statement of cash flows under IFRS.
cash flow statement
108
# What does this define?
An individual who has passed the professional examinations and practical experience requirements of the Certified General Accountants Association of Canada (CGA-Canada).
Certified General Accountant (CGA)
109
# What does this define?
An individual who has passed the professional examinations and practical experience requirements of the Society of Management Accountants of Canada (CMA-Canada).
Certified Management Accountant (CMA)
110
# What does this define?
An individual who has passed the professional examinations and practical experience requirements of the Canadian Institute of Chartered Accountants (CICA).
Chartered Accountant (CA)
111
# What does this define?
An individual who has passed the Chartered Professional Accountants' professional examinations and practical experience requirements.
Chartered Professional Accountant (CPA)
112
# What does this define?
A document containing accounting standards and guidance for Canadian organizations, published by the Canadian Institute of Chartered Accountants.
CICA Handbook
113
# What does this define?
A preferred characteristic of accounting information whereby information for one company is comparable to information prepared for another organization.
comparability
114
# What does this define?
A business organized under provincial, territorial, or federal charter as a separate legal entity.
corporation
115
# What does this define?
The trade-off that exists between the accuracy of financial information and the cost to produce that information. Also known as benefit versus cost constraint.
cost constraint
116
# What does this define?
In financial statements, the recognition of transactions at the amount of cash paid or received. Also known as the historical cost basis.
cost principle
117
# What does this define?
Moral principles that guide the conduct of individuals.
ethics
118
# What does this define?
Assets used up or services consumed in the process of generating revenues.
expenses
119
# What does this define?
Recording an event in a manner that reflects the substance of the transaction.
faithful representation
120
# What does this define?
Revenue from providing services.
fees earned
121
# What does this define?
Revenue from providing services when payment is received at a later date.
fees earned on account
122
# What does this define?
The branch of accounting that is concerned with recording transactions using generally accepted accounting principles (GAAP) for a business or other economic unit and with a periodic preparation of various statements from such records.
financial accounting
123
# What does this define?
Financial reports that summarize the effects of events on a business.
financial statements
124
# What does this define?
A type of financial accounting report that is distributed to external users. The term "general purpose" refers to the wide range of decision-making needs that the reports are designed to serve.
general-purpose financial statements
125
# What does this define?
An assumption that the business will continue for the foreseeable future.
going concern assumption
126
# What does this define?
In financial statements, the recognition of transactions at the amount of cash paid or received. Also known as the cost principle.
historical cost basis
127
# What does this define?
A summary of the revenues and expenses for a specific period of time, such as a month or a year. (p. 16) Also known as statement of comprehensive income under IFRS.
income statement
128
# What does this define?
Money received for interest.
interest revenue
129
# What does this define?
An organization that issues International Financial Reporting Standards for many countries.
International Accounting Standards Board (IASB)
130
# What does this define?
Guidelines, contained in Part I of the CICA Handbook for the preparation of financial statements for publicly accountable enterprises.
International Financial Reporting Standards (IFRS)
131
# What does this define?
An obligation to give up either services or assets.
liability
132
# What does this define?
The branch of accounting that provides accounting information for internal users' decision making.
management (or managerial) acccounting
133
# What does this define?
A business that changes basic inputs into products that are sold to customers.
manufacturing business
134
# What does this define?
Information is considered material if omitting it or misstating it could influence decisions that users make on the basis of financial information of an entity.
materiality
135
# What does this define?
A business that purchases products from other businesses and sells them to customers.
merchandising business
136
# What does this define?
The amount by which revenues exceed expenses.
net income
137
# What does this define?
The amount by which expenses exceed revenues.
net loss
138
# What does this define?
Assets less liabilities, being the amount that the owner is entitled to.
owner's equity
139
# What does this define?
An unincorporated business form consisting of two or more persons conducting business as co-owners for profit.
partnership
140
# What does this define?
Items such as supplies that will be used in the business in the future.
prepaid expenses
141
# What does this define?
The field of accounting whereby accountants are employed by a business or a not-for-profit organization.
private accounting
142
# What does this define?
Profit-oriented organizations that do not issue shares or bonds through stock exchanges.
private enterprises
143
# What does this define?
The difference between the amounts received from customers for goods or services provided and the amounts paid for the inputs used to provide the goods or services.
profit
144
# What does this define?
A business owned by one individual.
proprietorship
145
# What does this define?
The field of accounting where accountants and their staff provide services on a fee basis.
public accounting
146
# What does this define?
Companies with shares or bonds listed on stock exchanges and other organizations, such as credit unions or investment dealers, that impact large or diverse groups of stakeholders.
publicly accountable enterprises
147
# What does this define?
Items purchased by agreeing to pay the supplier in the near future.
purchase on account
148
# What does this define?
Ability of financial information to be helpful to investors and others making financial decisions.
relevance
149
# What does this define?
Money received for rent.
rent revenue
150
# What does this define?
The form of balance sheet that presents the liabilities and owner's equity sections below the assets section.
report form
151
# What does this define?
Recording an event in a manner that reflects the substance of the transaction.
representational faithfulness
152
# What does this define?
Revenue transactions that meet the recognition criteria are normally recognized when goods provided or services are performed.
revenue recognition principle
153
# What does this define?
Increases in owner's equity as a result of selling services or products to customers.
revenues
154
# What does this define?
The total amount charged customers for merchandise sold, including cash sales and sales on account.
sales
155
# What does this define?
The amount charged customers for merchandise sold when payment is received at a later date.
sales on account
156
# What does this define?
A business providing services rather than products to customers.
service business
157
# What does this define?
For companies reporting under IFRS, a summary of the cash receipts and cash payments for a specific period of time, such as a month or a year. Also known as cash flow statement.
statement of cash flows
158
# What does this define?
For companies reporting under IFRS, a summary of the changes in the owner's equity that have occurred during a specific period of time, such as a month or a year. Also known as statement of owner's equity and as statement of retained earnings for corporations reporting under ASPE.
statement of changes in equity
159
# What does this define?
For companies reporting under IFRS, a summary of the revenues and expenses for a specific period of time, such as a month or a year. Also known as income statement.
statement of comprehensive income
160
# What does this define?
For companies reporting under IFRS, a list of the assets, liabilities, and owner's equity as at a specific date, usually at the close of the last day of a month or a year. Also known as balance sheet.
statement of financial position
161
# What does this define?
A summary of the changes in the owner's equity that have occurred during a specific period of time, such as a month or a year. Also known as statement of retained earnings for corporations reporting under ASPE, and as statement of changes in equity for corporations reporting under IFRS.
statement of owner's equity
162
# What does this define?
For corporations reporting under ASPE, a summary of the changes in the owner's equity that have occurred during a specific period of time, such as a month or a year. Also known as statement of owner's equity and as statement of changes in equity for corporations reporting under IFRS.
statement of retained earnings
163
# What does this define?
Ability of financial information to be produced on a timely basis so that it is helpful to investors and others making financial decisions.
timeliness
164
# What does this define?
Ability of information to improve the reader's comprehension of financial information, such as notes to the financial statements.
understandability
165
# What does this define?
A characteristic of financial information such that the information can be confirmed by source documents.
verifiability
