Chapter 1 Vocab

Question 1

accounting

Answer 1

an information and measurement system that identifies, records and communicates an organization’s business activities

Question 2

recordkeeping or bookkeeping

Answer 2

the recording of transactions and events

Question 3

financial accounting

Answer 3

focuses on the needs of external users

Question 4

managerial accounting

Answer 4

focuses on the needs of internal users

Question 5

external uses of accounting information

Answer 5

do not directly run the organization and have limited access to its accounting information

Question 6

internal users of accounting information

Answer 6

directly manage the organization

Question 7

data analytics

Answer 7

a process of analyzing the data to identify meaningful relations and trends

Question 8

data visualizations

Answer 8

graphical presentation of data to help people understand their significance

Question 9

ethics

Answer 9

beliefs that separate right from wrong

Question 10

internal controls

Answer 10

procedures to protect assets, ensure reliable accounting, promote efficiency, and uphold company policies

Question 11

auditors

Answer 11

verify the effectiveness of internal controls

Question 12

generally accepted accounting principles (GAAP)

Answer 12

Concepts and rules governing financial accounting. Wants information to have relevance and faithful representation.

Question 13

Financial Accounting Standards Board

Answer 13

given the task of stetting the GAAP by the SEC

Question 14

Securities and Exchange Commission (SEC)

Answer 14

U.S. government agency that oversees proper use of GAAP by companies that sell stock and debt to the public.

Question 15

audit

Answer 15

examines whether financial statements are prepared using GAAP

Question 16

International Accounting Standards Board (IASB)

Answer 16

issues IFRS

Question 17

International Financial Reporting Standards (IFRS)

Answer 17

identifies preferred accounting practices for international accounting

Question 18

components of FASB conceptual framework

Answer 18

objectives, qualitative characteristics, elements, recognition and measurement

Question 19

Objectives in FASB conceptual framework

Answer 19

to provide information useful to investors, creditors, and others

Question 20

Qualitative characteristics in FASB conceptual framework

Answer 20

to require information that has relevance and faithful representation

Question 21

Elements in FASB conceptual framework

Answer 21

to define items in financial statements

Question 22

Recognition and measurement in FASB conceptual framework

Answer 22

to set criteria for an item to be recognized as an element and how to measure it

Question 23

general accounting principles

Answer 23

the assumptions, concepts and guidelines for preparing financial statements

Question 24

Specific accounting principles

Answer 24

detailed rules used in reporting business transactions and events

Question 25

measurement principle (cost principle)

Answer 25

Accounting information is based on actual cost

Question 26

revenue recognition principle

Answer 26

revenue is recognized when goods or services are provided to customers and at the amount expected to be received from the customer

Question 27

Expense recognition principle (matching principle)

Answer 27

a company records the expenses it incurred to generate the revenue reported

Question 28

Expense recognition principle (matching principle)

Answer 28

a company records the expenses it incurred to generate the revenue reported

Question 29

full disclosure principle

Answer 29

a company reports the details behind financial statements that would impact user’s decisions