FABM Chapter 1 Reviewer

Question 1

The one that defined “Accounting” as a service activity.

Answer 1

The Accounting Standards Council (ASC)

Question 2

Its function is to provide quantitative information, primarily financial in nature, about economic entities, that are intended to be useful in making economic decisions.

Answer 2

Accounting

Question 3

The one that defined “Accounting” as 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.

Answer 3

The Committee on Accounting Terminology of the American Institute of Certified Public Accountants (AICPA)

Question 4

______________ in its Statement of Basic Accounting Theory defined “Accounting” as the process of identifying, measuring, and communicating economic information to permit informed judgment and decision by users of the information.

Answer 4

The American Accounting Association (AAA)

Question 5

As the process of identifying, measuring, and communicating economic information to permit informed judgment and decision by users of the information.

Answer 5

Accounting

Question 6

Shows a list of the resources, debts and capital of the enterprise as of the date of reporting

Answer 6

Balance sheet/Statement of Financial Position

Question 7

Shows the income, expense and
the net result of operations over a period of time up to the date of reporting cash inflows and
cash outflows

Answer 7

Income Statement/Statement of Comprehensive Income

Question 8

Shows the changes in the cash position: of the enterprise for the period

Answer 8

Statement of Cash Flows

Question 9

Shows a summary of the changes in the capital of the enterprise during the period

Answer 9

Statement of Change in Equity

Question 10

Shows additional disclosures of certain information
which are useful to users of financial statements in understanding the information in the
financial statements

Answer 10

Notes to the financial statements

Question 11

Will record these transactions in the
accounting journal, classify them in the ledger,
and compile them into financial statements

Answer 11

Accounting

Question 12

Shows the income earned, expenses incurred and
the net results of operations for the period.

Answer 12

The income statement

Question 13

Would be favorable because it will increase the capital or wealth of the business.

Answer 13

Net Income

Question 14

Would be unfavorable because it will decrease the capital of the business.

Answer 14

Net loss

Question 15

this pertains to inflows of wealth to the business from the selling of goods or services to customers or clients or other events.

Answer 15

Income

Question 16

This pertains to outflows of resources, depletion of resources, or incurrences of obligations that will require future outflows of resources in the conduct of business. Expenses are costs making income.

Answer 16

Expense

Question 17

Shows a summary of the changes in the capital of the
business.

Answer 17

The statement of change in equity

Question 18

Is considered the lifeblood of business. Information on cash is very essential to users.

Answer 18

Cash

Question 19

Shows the changes in
the cash position of the business.

Answer 19

Cash Flow Statement

Question 20

Pertains to properties or resources of the business

Answer 20

Assets

Question 21

Pertains to debts or obligations of the business

Answer 21

Liability

Question 22

Pertains to the capital or residual interest of the owner/s of the business; Equity is total assets less total liabilities.

Answer 22

Equity

Question 23

Pertains to the ability of the enterprise to raise cash and hence pay off the debt in the short term while.

Answer 23

Liquidity

Question 24

Pertains to the ability to pay off the debt in the long term.

Answer 24

Solvency

Question 25

discuss the accounting policies (i.e. accounting methods or principles) adopted as the basis of preparation of the financial statements including informative disclosures on the break-downs of items in the various statements.

Answer 25

Notes to the financial statements

Question 26

The need for accounting started because people needed to:

Answer 26

Record business transactions because people have the normal tendency to forget things. Know if they were successful financially. Know how many assets they owned and how much liability they owed.

Question 27

They made clay tokens in various shapes and with various markings to indicate different products. Before shipping their goods, a trader would take one token for each item in the shipment and encase the tokens in a ball of clay called a "bollae" (pronounced "bowl-eye") meaning bowl. The buyer would match the tokens with the items in the shipment to verify that everything was accounted for

Answer 27

Middle East (ancient Mesopotamia, Egypt, and Babylon)

Question 28

They made clay tokens in various shapes and with various markings to indicate different products. Before shipping their goods, a trader would take one token for each item in the shipment and encase the tokens in a ball of clay called a "______________" (pronounced "bowl-eye") meaning bowl. The buyer would match the tokens with the items in the shipment to verify that everything was accounted for

Answer 28

Bollae

Question 29

advanced tablets, whose markings and signs provided tallies, recorded inventory, counts and transactions, and distinguished inventory items.

Answer 29

The Bronze Age and Iron Age and the Far East

Question 30

Was created around 1760 B.C. in Babylon. Among its purposes, it standardized weights and measures and provided guidance on commercial transactions and payments.

Answer 30

The Code of Hammurabi

Question 31

The introduction of double-entry bookkeeping which is defined as any bookkeeping system in which there was a "debit" and "credit" entry for each transaction.

Answer 31

13th century

Question 32

Latin word for debits is ______ (meaning to owe) or _____ (what is due or something owed)

Answer 32

Debere or Debitum

Question 33

While, credit is _________ (to entrust) or __________ (something entrusted to another or la loan)

Answer 33

Credere or Creditum

Question 34

The oldest surviving record in the English language contains an annual description of rents, fines, and taxes due to the King of England, beginning 1130 to 1830.

Answer 34

Pipe Roll

Question 35

He is called the father of accounting and bookkeeping;

Answer 35

Luca Pacioli

Question 36

He was the first to describe the system of debits and credits in journals and ledgers;

Answer 36

Luca Pacioli

Question 37

Luca Pacioli wrote a book entitled Summa de arithmetica, geometria, proportioni et proportionalita.

Answer 37

Luca Pacioli

Question 38

Suggested the seven (7) key ingredients before a formal accounting

Answer 38

Ananias Charles Littleton

Question 39

focuses on the recording of financial data relating to business operations in a significant and orderly manner. It covers procedural

Answer 39

Bookkeeping

Question 40

is broader in scope. It calls for a greater understanding of records obtained from bookkeeping and an ability to analyze and interpret the information provided by bookkeeping records. Accounting is concerned with the summarizing phase of accounting data.

Answer 40

Accounting

Question 41

provides necessary data for accounting and accounting starts where bookkeeping ends.

Answer 41

Bookkeeping

Question 42

The power to change ownership exists and there is a need to record the transaction.

Answer 42

Private Property

Question 43

Wealth is productively employed so that transactions are important enough to make their recording worthwhile and cost effective.

Answer 43

Capital

Question 44

The exchange of goods on a high level to motivate someone to devise a formally organized system that could be applied universally to record transactions.

Answer 44

Commerce

Question 45

The use of future goods where money is exchanged for goods with no detail of who the customer was, this existence of buying and selling that would lead to the need of a formally organized system that could be applied universally to record credit transactions.

Answer 45

Credit

Question 46

A mechanism for making a permanent record in a common language

Answer 46

Writing

Question 47

There needs to be a common denominator for exchange.

Answer 47

Money