Chapter One Questions Flashcards
Why is Accounting important?
Accounting information impacts us all
Preparing and entering a list of checks issued…
Recording
Using a cash register to enter sales…
Recording
Entering a list of the sales invoices, including the prices and quantities, for the company’s record keeper….
Identifying
Interpreting information from financial reports.
communicating
Preparing financial statements for creditors.
communicating
The recording of transactions and events only, either manually or electronically…
Recording-keeping
An information and measurement system that identifies, records, and communicates relevant, reliable, and comparable information about an organization’s business activities.
Accounting
Customers
External Information User
Purchasing manager
Internal Information User
Marketing Manager
Internal Information User
Suppliers
External Information User
Labor Union
External Information User
_________ includes opportunities in general accounting, cost accounting and internal auditing.
Managerial accounting
The majority of accounting opportunities are in _____ accounting.
private
Accounting certifications include: IFRS, CPA , GAAP
SEC
CPA
In the fraud triangle, when a person feels an incentive to commit fraud, this is referred to as _______.
pressure
A company records the expenses incurred to generate the revenue reported…
Expense recognition principle
Revenue is recognized when goods are provided to the customer at the amount expected to be received…
Revenue recognition principle
A company reports the details behind financial statements that would impact user’s decisions…
Full-disclosure principle
Accounting information is based on actual cost…
Measurement principle
Presumes that the business will continue operating in the future…
Going-concern assumption
A business is accounted for separately from other business entities and its owner…
Business entity assumption
The life of the company can be divided into specific time periods…
Time period assumption
The four basic financial statements are:
Income Statement, Statement of retained earnings, Balance sheet, and Statement of cash flows
Identify which items belong on the income statement…
Revenue, expenses and net income
Identify which items belong on the statement of retained earnings.
Dividends, beginning retained earnings, ending retained earnings.
Identify which items belong on the balance sheet.
Cash, accounts receivable, and common stock
Identify which items belong on the statement of cash flows
Cash flows from investing, operating and financing activities
Analyzing and interpreting reports.
Communicating
Acquiring knowledge of revenue transactions.
Identifying
Reporting debt owed to lenders.
Communicating
Maintaining a log of sales transactions.
Recording
Measuring revenue from a holiday sale.
Recording
Measuring the costs of a product.
Recording
Reporting the profitability of a product line.
Communicating
Preparing financial statements.
Communicating
Should we buy, hold, or sell a company’s stock?
External user
What are the costs of our service to customers?
Internal user
What are the costs of our service to customers?
Internal user
Will we earn enough revenue from developing this new product?
Internal user
Should we make a five-year loan to that business?
External user
How well has our new salesperson performed?
Internal user
Should we spend additional money for redesign of our product?
Internal user
Business press
Internal User
Politician
External User
SEC regulator
External User
Creditor
External User
External auditors
External Users
Labor boss
External User
Customer
External User
Planning transactions to minimize taxes
Tax accounting
Analyzing external financial reports
Financial accounting
Internal auditing
Managerial accounting
Managerial accounting
Managerial accounting
Cost accounting
Managerial accounting
Reviewing financial statements for criminal investigations
Financial accounting
External auditing
Financial accounting
Budgeting
Managerial accounting
A more effective way to stop fraud than detection.
Prevention
Beliefs that distinguish right from wrong
Ethics
Procedures to reduce fraud—examples are independent reviews, physical controls, and good records.
Internal controls
Examines whether financial statements are prepared using GAAP.
Audit
Three factors push a person to commit fraud: opportunity, pressure, and rationalization.
Fraud triangle
AJ Company pays a business income tax and has two owners.
Corporation
Ownership of Zander Company is divided into 1,000 shares of stock. The company pays a business income tax.
Corporation
Russell is the sole owner of Wilson Sports. The business is not a separate legal entity from Russell and the business ends with his death.
Sole proprietorship
Trent Company is owned by Trent Malone, who is personally liable for the company’s debts.
Sole proprietorship
Micah and Nancy own Financial Services, which pays a business income tax. Micah and Nancy do not have personal responsibility for the debts of Financial Services
Corporation
Vera is the sole owner of Tech Solutions. The business is a separate legal entity and does not pay an additional business income tax.
Limited liability company
IBC Services does not have separate legal existence apart from the one person who owns it.
Sole proprietorship
Harvey and Louis own NYC Law. Harvey and Louis are jointly liable for partnership debts.
Partnership
