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1st Year College in Accountancy > ACTG121 Sole Prop Prelims > Flashcards

ACTG121 Sole Prop Prelims Flashcards

1
Q

is a process of identifying, recording and communicating economic information that is useful in making economic decisions.

A

Accounting

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2
Q

Is a service activity, its function is to provide quantitative information, primarily financial in nature.

A

Accounting

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3
Q

Is process of identifying, measuring and, communicating economic decisions by users of information.

A

Accounting

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4
Q

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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5
Q

Information system that measures, processes and communicates financial information about an identifiable economic entity.

A

Accounting

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6
Q

is a process with the basic purpose of providing information about economic activities that is intended to be useful in making economic decisions.

A

Nature of Accounting

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7
Q

Father of Modern Accounting

A

Fra Luca Pacioli 1494

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8
Q

Who published “Summa Arithmetica Geometria Proportioni and Proportionista” on Nov 14 1494 and who introduced double entry system?

A

Fra Luca Pacioli

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9
Q

Does FINANCIAL STATEMENTS for the external users for its General Purpose (Branches of Accounting)

A

Financial Accounting

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10
Q

Uses FINANCIAL REPORT for internal users for its specific purpose (Branches of Accounting)

A

Management Accounting

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11
Q

The Government organizations (Branches of Accounting)

A

Government Accounting

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12
Q

Inspection of entity’s financial statements if it corresponds to its business criteria (Branches of Accounting)

A

Auditing

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13
Q

Gives tax advice and files income tax returns (Branches of Accounting)

A

Tax Accounting

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14
Q

Failure to file tax returns (Branches of Accounting)

A

Tax Accounting

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15
Q

Violation is imprisonment for not less than 6 & not more than 10 years (Branches of Accounting)

A

Tax Accounting

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16
Q

Systematic Recording & Analyzing of cost of material, labor, etc. that is related to manufacturing and service type of business
(Branches of Accounting)

A

Cost Accounting

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17
Q

The Academy (Branches of Accounting)

A

Accounting Education

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18
Q

Looks into economic events and analyzes it to make better economic decisions (Branches of Accounting)

A

Accounting Research

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19
Q

Branches of Accounting (8)

A
  • Financial Accounting
  • Management Accounting
  • Government Accounting
  • Auditing
  • Tax Accounting
  • Cost Accounting
  • Accounting Education
  • Accounting Research
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20
Q

Types of Business Activities (3)

A
  • Service
  • Merchandising
  • Manufacturing
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21
Q
  • Registered under DTI (DEPARTMENT OF TRADE AND INDUSTRIES)
    (Types of Business Organization)
A

Sole Proprietorship

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22
Q
  • Registered under SEC (SECURITIES EXCHANGE COMMISION)
  • Formed by contracts
    (Types of Business Organization)
A

Partnership

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23
Q
  • Formed by operation of law.
    (Types of Business Organization)
A

Corporation

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24
Q
  • Registered under CDA (COOPERATIVE DEVELOPMENT AUTHORITY)
    (Types of Business Organization)
A

Cooperative

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25
Q
  • Directly involved in managing the business
A

Internal Users

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26
Q
  • NOT directly involved in managing the business
A

External Users

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27
Q

Types of Information provided by Accounting

A
  • Qualitative Information
  • Quantitative Information
  • Financial Information
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28
Q

to provide information about an entity’s economic resources.

A

Primary Objective

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29
Q

to provide information useful in ASSESSING the entity’s management stewardship.

A

Secondary Objective

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30
Q
  • is not a standard. Rather, the _______________________ serves as a general frame of reference in developing or applying the standards.
A

Conceptual Framework

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31
Q

-Personal money and your business money are separated.
-The business is viewed as a separate entity, distinct from its owner(s). Only the transactions of the business are recorded in the books of accounts. The personal transactions of the business owner(s) are not recorded.

A

Separate entity concept

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32
Q

Initially recorded at their acquisition cost.

A

Historical Cost Concept (Cost Principle)

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33
Q
  • As if your business lives forever.
  • The business is assumed to continue to exist for an indefinite period of time.
A

Going concern

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34
Q

Some costs are initially recognized as assets and charged as expenses only when the related revenue is recognized.

A

Matching Principle (C&E)

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35
Q

Inc & Exp Recog.

A

Accrual Basis of Accounting

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36
Q

Choosing the unfavorable outcome.

A

Prudence (or conservatism)

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37
Q
  • Accounting period or Reporting period.
  • Fiscal year & Calendar year are almost the same.
  • Interim period (quarter 3 mos & semiannual 6 mos)
A

Time/Reporting Period

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38
Q
  • Peso’s purchasing power is regarded as stable.
  • Convert other currencies in peso.
A

Stable monetary unit

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39
Q
  • An item is material if its omission or misstatement could influence economic decisions.
  • It is a matter of professional judgment and is based on the size and nature of an item being judged.
A

Materiality Concept

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40
Q
  • Should not exceed the benefits to be derived from the information used.
A

Cost Benefit (Cost constraint)

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41
Q
  • Related to Materiality & Cost Benefit Concepts
  • Reflects a series of judgmental trade offs
  • Sufficient detail to disclose matters that make a difference to users yet.
  • Sufficient condensation to make the information understandable
A

Full Disclosure Principle

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42
Q
  • Accounting policies used this year shall be the same used last year
  • If it were to change, do it in the next accounting period or year
A

Consistency Concept

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43
Q
  • Are the traits that determine whether an item of information is useful to others. Without these characteristics, information may be deemed unless.
A

QUALITATIVE CHARACTERISTICS OF USEFUL FINANCIAL INFORMATION

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44
Q
  • It is relevant if it can affect decision.
    (Fundamental Qualitative Characteristics)
A

A. Relevance

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45
Q
  • if it can help users to make predictions about future outcomes.
A

Predictive Value

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46
Q
  • if it can help users confirm their past predictions.
A

Confirmatory Value

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47
Q
  • is material if omitting it or misstating it could influence the decisions of users.
A

Materiality

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48
Q
  • It represents the actual effects of events that have taken place
    (Fundamental Qualitative Characteristics).
A

B. Faithful Representation

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49
Q
  • All information necessary for users to have a complete understanding of the FS is provided
A

Completeness

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50
Q

information is selected or presented without bias

A

Neutrality

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51
Q

means the
information is not materially misstated.

A

Free from Error

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52
Q
  • Information is comparable if it can help users identify similarities and differences between sets of information.
    (Enhanced Qualitative Characteristics)
A

A. Comparability

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53
Q
  • Information is verifiable if different users could reach a general agreement as to what the information intends to represent.
    (Enhanced Qualitative Characteristics)
A

B. Verifiability

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54
Q
  • Information is timely if it is available to users in time to be able to influence their decisions.
    (Enhanced Qualitative Characteristics)
A

C. Timelines

55
Q
  • Information is understandable if it is presented in a clear and concise manner.
    (Enhanced Qualitative Characteristics)
A

D. Understandability

56
Q
  • Regulating corporations it includes partnerships
  • Requires them to file audited financial statements
A

Securities Exchange Commission (SEC)

57
Q
  • Task in Collecting national Taxes and Administering the provisions of the Tax Code.
  • The provisions do at times reflect the choice of accounting methods and procedures .
A

Bureau of Internal Revenue (BIR)

58
Q

FSRSC

A

Financial Sustainability Reporting Standards Council

59
Q

PFRS

A

Philippine FInancial Reporting Standards

60
Q

IFRS

A

International Financial Reporting Standards

61
Q
  • Tasked in regulating banks and other entities performing banking functions .
  • BSP influences the selection and application of accounting policies by these business.
A

Bangko Sentral ng Pilipinas (BSP)

62
Q
  • Tasked in regulating cooperatives.
  • CDA influences the selection and application of accounting policies by these businesses.
A

Cooperative Development Authority (CDA)

63
Q
  • are the characteristics that make information useful to users.
A

Fundamental Qualitative Characteristics

64
Q
  • are the characteristics that enhance the usefulness of information
A

Enhancing Qualitative Characteristics

65
Q

Basic Accounting Equation

A

ASSET = LIABILITIES + EQUITY

66
Q

Extended Accounting Equation

A

ASSET = LIABILITIES + EQUITY+INCOME-EXPENSE

67
Q

FORMULA FOR ENDING CAPITAL

A

BEG CAPITAL = INCOME - EXPENSE

68
Q

Short introduction of Obligations

A
  • a duty or responsibility.
  • Is under Liabilities
  • To settle an obligation you should exchange your economic resource
  • Liabilities as Obligations
  • Assets as Economic Resource
69
Q
  • Supported by Law, Legislation, and Contracts
A

A. Legal Obligation

70
Q
  • Mere words and illustrations (w/o) contracts.
A

B. Constructive Obligation

71
Q
  • Already obtained economic benefits or taken an action, as a consequence, you are required to transfer an economic resource.
A

C. Present Obligation

72
Q
  • Is under Assets
  • Don’t necessarily need to own the economic resource.
A

Short introduction of Control

73
Q

means you have the exclusive right to enjoy those benefits and the ability to prevent others from enjoying those benefits.

A

Control

74
Q

The control over an economic resource have resulted from a past event or translation.

A

Past Event

75
Q

is the basic storage of information in accounting

A

Accounting

76
Q

THE 5 MAJOR ACCOUNTS

A
  • Asset
  • Liabilities
  • Equity
  • Income
  • Expense
77
Q

Economic Resources you control that resulted from past events and can provide you future economic benefits.

A

Asset

78
Q

Present Obligations that have resulted from past events and can require you to give up resources when settling them.

A

Liablities

79
Q

Asset minus Liabilities

A

Equity

80
Q

Increases in economic benefits during the period in the form of increases in assets that in result increases equity.

A

Income

81
Q

arises in the course of the ordinary activities of a business.

A

Revenue

82
Q

represent other items that meet the definition of income and may or not may arise in the course of the ordinary activities.

A

Gains

83
Q

Decreases in economic benefits during the period in the form of decreases in assets that in result decreases in equity.

A

Equity

84
Q

arises in the course of the ordinary activities of a business.

A

Expenses

85
Q

represents other items that meet the definition of expenses and may or not may arise in the same course of the ordinary business.

A

Losses

86
Q

Varies depends on the type of business

A

Chart of Accounts

87
Q

Banks chart of account should conform to BSP Chart of Accounts.

A

BSP (Bangko Sentrol ng Pilipinas)

88
Q

Cooperatives chart of account should conform to CDA Chart of Accounts.

A

CDA (Cooperative Development Authority)

89
Q
  • National Government Agencies MUST conform to (RCA) Revised Chart of Accounts issued by the (COA) Communion on Audit
A

COA (Commision on Audit)

90
Q

The aggregate amount of estimated losses for uncollectible accounts receivable.

A

Short Introduction in Allowance for doubt/ bad debts accounts

91
Q
  • The portion of the cost of a depreciable asset
  • Decreasing of value over time
  • Ex. bldg., equipment, vehicle etc..
  • Accumulated Depreciation - total amount of depreciation expenses recognized since the asset was acquired and made available for use.
A

Short Introduction in Depreciation expense

92
Q
  • “In & Out” sellers cost of delivering goods to customers.
  • Other terms. Delivery expense, transportation cost, & carriage outwards.
  • Contains tolls, gas, labor/rate of the worker.
A

Short Introduction in Freights

93
Q

“Book of original entries”

A

Journal

94
Q

Simplifies the recording process.

A

Special Journal

95
Q

Record Sales on Account.

A

A. Sales Journal

96
Q

Record Purchases of Inventory on Account.

A

B. Purchase Journal

97
Q

Record all transactions involving receipts of cash.

A

C. Cash Receipts Journal

98
Q

Record all transactions involving payment of cash.

A

D. Cash disbursement journal

99
Q

If a business does not utilize special journals, all transactions are record in the general journal

A

General Journal

100
Q

“Book of final entries”

A

Ledger

101
Q

Provides breakdown of the balances of controlling accounts

A

A. Subsidiary Ledger

102
Q

Consist of group of accounts, or balances that needed a breakdown.

A

a. Controlling Account

103
Q

Contains all accounts appearing in the trial balance

A

B. General Ledger

104
Q

Double-Entry system involves the use of the concepts of “Duality” and “Equilibrium”

A

Concept of Duality and Equilibrium

105
Q

Views each transactions as having a two fold effect on values, a value parted with and value valued with, and each transaction is recorded using at least two accounts

A

A. The concept of duality

106
Q

Requires that each transaction is recorded in terms of equal debits and credits. For every peso debited, there is a corresponding peso credited, and vice versa

A

B. The concept of equilibrium

107
Q

of an account is on the side where an increase in that account is recorded

A

Normal Balance

108
Q

Normal Bal increases, vice versa

A

Rules of debits, and credits

109
Q

Deduction to their related account accounts

A

Contra Account

110
Q

Increase to their related accounts

A

Adjunct Account

111
Q
  • Represents the steps or procedures used to record Transactions and prepare FS.
  • The accounting cycle implements the accounting process of identifying, recording, and communicating economic information
A

Accounting Cycle

112
Q

Gathers information and determines the effect of the transaction on the accounts

A

Analyzing

113
Q

Accountable events are recorded in the journals

A

Journalizing

114
Q

Information from journalizing is transferred to the ledger or T accounts

A

Posting to Ledger

115
Q

Balances the Gen Ledger to prove that credit and debit is equal. Serves as basis for Adjusting Entries

A

Prep. Unadjusted Trial Balance

116
Q

Updates the accounts as of the reporting date on an accrual basis by recording accruals, expiration of deferrals, estimations, and other events often not signaled by new source documents

A

Prep. Adjusting Entries

117
Q

Trial Balance are rechecked after adjustments are made. This serves as the preparation of the Financial Statements.

A

Prep. Adjusted Trial Balance

118
Q

these are the means by which information is processed is communicated to users

A

Financial Statements

119
Q

Temporary Accounts or Nominal Accounts are closed and the resulting profit or loss is transferred to an equity account

A

Closing the Book

120
Q

The equality of debits and credits are again rechecked after the closing pro

A

Post-Closing Trial Balance

121
Q

Are usually made at the beginning of the next account period to simplify the recording of certain transactions in that period

A

Reversing Entries (opt)

122
Q

Steps in Accounting Cycle

A
  • Analyzing
  • Journalizing
  • Posting to Ledger
  • Prep. Unadjusted Trial Balance
  • Prep. Adjusting Entries
  • Prep. Adjusted Trial Balance
  • Financial Statements
  • Closing the Book
  • Post-Closing Trial Balance
  • Reversing Entries (opt)
123
Q

Sales of Goods

A

A. Sales Invoices (SI)

124
Q

Rendering of Services

A

B. Officials’ reports (OR)

125
Q

a Document Issued by B or S, indicating types, quantities and agreed prices for Goods or Services.

A

C. Purchase orders

126
Q

Document signed by the receiver of a shipment acknowledging the receipt of goods

A

D. Delivery receipts

127
Q

Evidences a deposit to a bank account

A

E. Bank deposit slips

128
Q

Is a report issued by a bank (on monthly basis) that shows the Deposits and Drawals during the period and cumulative balance of a depositor’s bank account

A

F. Bank Statements

129
Q

Is an instrument that orders a bank (drawee) to pay the person named on the check or the bearer thereof (payee) a definite amount of money from the drawer’s bank account

A

G. Checks

130
Q

Is a report that is sent to its customers listing the transactions with the customer during a period (Notice of Billing), Ex. Balance of tuition.

A

H. Statement of account, and the like

131
Q

Identifying and Analyzing Transaction and Events

A
  • Sales Invoices (OI)
  • Officials’ reports (OR)
  • Purchase orders
  • Delivery receipts
  • Bank deposit slips
  • Bank statements
  • Checks
  • Statement of account, and the like
132
Q

are transactions that involve the business and another external party, Ex. includes Sales, Purchases, Borrowing, payment of liabilities,

A

External events

133
Q

are events that do not involve an external party, Ex. Includes production, casualty losses

A

Internal Events

134
Q

Types of Events

A
  • External Events
  • Internal Events

1st Year College in Accountancy (10 decks)

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