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Accounting 1 > Chapter 1.1 > Flashcards

Chapter 1.1 Flashcards

this chapter mainly focuses on theory

1
Q

quantifies business communication

A

accounting

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2
Q

language of business

A

accounting

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3
Q

scorekeepers of business

A

accountants

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4
Q

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

A

accounting

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5
Q

the art of recording, classifying, and summarizing in a significant manner and in terms of money, transactions and events which are in part, at least, of a financial character, and interpreting the results thereof.

A

accounting

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6
Q

what does “ASC” stand for

A

Accounting Standards Council

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7
Q

what does “AAA” stand for

A

American Accounting Association

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8
Q

define the Basic Accounting Theory that defines accounting based on the AAA own description

A

the process of identifying, measuring, and communicating economic information to permit informed judgements and decisions by users of the information.

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9
Q

Natures of Accounting

A

1- A Discipline
2- A Service Activity
3- An At and Science
4- The Language of business
5- The Eyes of Business

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10
Q

this nature observes professional standards and professional ethics as other fields of professions like medicine, law, engineering, and others

A

A Discipline

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11
Q

this nature is involved in providing professional services particularly in performing tasks by making financial reports regarding the financial activities of economic entities.

A

A Service Activity

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12
Q

this nature describes that accounting is designed to preform its service activity with utmost efficiency and in the best possible manner without any wastage of time and money. it is also described to be regulated by accounting rules, principles, postulate and theories.

A

An Art and Science

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13
Q

If one account is ______, then the other account is ________.

A

debited, credited

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14
Q

this nature describes that accounting is means of communication of the results of business operations to various parties who are directly or indirectly interested on the economic affairs of a business.

A

The Language of Business

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15
Q

how much the increase in capital as a result of business operation

A

profitability

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16
Q

the readily availability of funds to finance business operations

A

liquidity

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17
Q

the ability of a business to pay its long-term obligation to others

A

solvency

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18
Q

the ability of a business to sustain its long-term profitability and cash flow

A

stability

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19
Q

how much of the borrowed capital and the owner’s capital are invested in a business

A

capital structure

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20
Q

when a business has excess cash available for investment oppurtunities and other uncertainities

A

financial flexibility

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21
Q

this nature describes that bookkeeping records, as the initial part of accounting activities, enable the owner of a business to check on their financial progress

A

The Eyes of Business

22
Q

verifies the truthfulness of financial reports concerning the business results of operations and financial condition

A

auditing

23
Q

give the functions of accounting

A

recording, classifying, summarizing, analyzing and interpreting, communicating, protecting the property of business, preparing legal requirements

24
Q

how does RECORDING function in accounting

A

the act of writing down business transactions in the books of accounts as they transpire. It is to ensure that all business transactions are recorded in a systematic manner in property books of accounts.

24
Q

what is an ASSET

A

anything that has current or future economic value to a business. Essentially, for businesses, assets include everything controlled and owned by the company that’s currently valuable or could provide monetary benefit in the future. Examples include patents, machinery, and investments

25
Q

where do you write the transactional records

A

Journal Book

26
Q

how does CLASSIFYING function

A

sorting of similar and related business transactions into three categories of assets, liabilities, and owner’s equity

26
Q

where is the classifying work of accounting done

A

Ledger Book

27
Q

what is a CAPITAL

A

cash or liquid assets being held or obtained for expenditures. In a broader sense, the term may be expanded to include all of a company’s assets that have monetary value, such as its equipment, real estate, and inventory. But when it comes to budgeting, capital is cash flow

27
Q

what is an OWNER’S EQUITY

A

the portion of a company’s assets that an owner can claim; it’s what’s left after subtracting a company’s liabilities from its assets. Owner’s equity is listed on a company’s balance sheet. Owner’s equity grows when an owner increases their investment or the company increases its profits

27
Q

what is a LIABILITY

A

any debts your company has, whether it’s bank loans, mortgages, unpaid bills, IOUs, or any other sum of money that you owe someone else. If you’ve promised to pay someone a sum of money in the future and haven’t paid them yet, that’s a liability

28
Q

what is the function of summarizing in accounting?

A

presenting classified data in a manner which is understandable and useful to the end-users

28
Q

in summarizing accounting info, this leads to the preparation of….?

A
  • Trial Balance
  • Statement of Comprehensive Income
  • Statement of Financial Position or Balance Sheet
28
Q

what is the function of analyzing and interpreting in accounting?

A

representing qualitative info in a language comprehensible to the users to determine the financial standing of a company as well as its stability and growth

29
Q

what is the primary function of accounting?

A

to provide financial reports to various end-users for economic decision-making

30
Q

what is the final function of accounting?

A

the recorded financial data are analyzed and interpreted in a manner that end-users can make meaningful judgements about the financial condition and profitability of a business.

31
Q

what is the function of communicating in accounting?

A

after being analyzed and interpreted, financial info has to be communicated to its intended end-users. this is done thru the distribution of accounting reports like Statement of Comprehensive Income and Statement of Financial Position.

32
Q

what is the function of protecting the property of business in accounting?

A

accounting evaluates the usefulness of business resources. it provides internal control to secure and ensure that unauthorized use shall not be made.

33
Q

what is the basic function of accounting?

A

the process of identifying, measuring,

33
Q

what is the function of preparing legal requirements in accounting?

A

in accounting, it facilitates the preparation of governmental reportorial requirements and ensures compliance of reporting on time. the accounting records may also serve as proofs of real transactions

34
Q

what is the advanced or critical function of accounting?

A

the audit function of accounting is the process of testing the reliability of financial reports, trace fraudulent transactions, and to locate and rectify accounting errors.

34
Q

what is GAAP?

A

it stands for “generally accepted accounting principles”. these are the standard ethics or standards that accountants have to follow in doing any accounting work.

34
Q

what is the overall job of accounting?

A

it is to provide general-purpose financial statements about the reporting entity that will be useful to present to potential user groups.

35
Q

what is general purpose reporting?

A

it helps users who lack the ability or authority to demand all the financial information they need from an entity and relies only on the information provided in the financial statements.

36
Q

What are the specific objectives of accounting?

A
  1. to ascertain results of operation during a period
  2. to ascertain the financial position
  3. to maintain control over assets
  4. to aid management in planning and performance evaluation
  5. to provide information to government agencies and legal purposes
37
Q

what is BOOKKEEPING?

A

it is the initial or clerical part of accounting. it is primarily concerned with procedures in making and and keeping of accounting records.

38
Q

what are the classical notion of stewardship?

A
  1. Valuation Accounting
  2. Stewardship
39
Q

What is Valuation Accounting?

A

this kind of accounting gives emphasis on how accounting measures the value of the firm

40
Q

What is Stewardship?

A

this kind of accounting gives emphasis on how accounting affects the value of a firm. it is usually used when the owner/s are not directly involved in the operations of their business.

41
Q

What are the four phases of accounting?

A

1.Recording transactions.
2.Classifying transactions.
3.Summarizing
4.Interpreting financial data.

42
Q

distinguish the statements of comprehensive income from statement of financial position

A

Also referred to as the statement of financial position, a company’s balance sheet provides information on what the company is worth from a book value perspective. A company’s income statement provides details on the revenue a company earns and the expenses involved in its operating activities.

Accounting 1 (5 decks)

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