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accounting > intro > Flashcards

intro Flashcards

1
Q

provides financial information about current operations and financial condition of a business to individuals, agencies, and organizations

A

purpose of accounting

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2
Q

users of accounting information

A

owners, managers, creditors, government agencies

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3
Q

system of gathering financial information about a business and reporting this information to users

A

accounting process

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4
Q

6 major steps of process

A
  1. analyzing
  2. recording
  3. classifying
  4. summarizing
  5. reporting
  6. interpreting
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5
Q

looking at events that have taken place; thinking about how these events have effected business

A

analyzing

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6
Q

entering financial information about events into an accounting system; information can be entered manually; most use computer

A

recording

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7
Q

sorting and grouping similar items together

A

classifying

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8
Q

bringing various items of information together; determines a result

A

summarizing

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9
Q

communicating results; communication in form of financial statements

A

reporting

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10
Q

deciding meaningful and importance of reported information; uses ratios and percentage analysis to explain how pieces of information relate to one another

A

interpreting

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11
Q

developed by financial account standards board, private standard setting body; provides concepts and guidelines to be followed during accounting process

A

generally accepted accounting principles

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12
Q

5 steps for adopting a standard

A
  1. issue is placed on FASBs agenda
  2. discussion memoradum is issued
  3. public hearings are held around country
  4. exposure draft issued
  5. final statement of finacnial accouting standard is issued
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13
Q

owned by one person; assumes all risks for business personally; owner makes all business decisions

A

sole proprietorship

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14
Q

owned by more than one person; parterners assume all risks for business personally; share risks and decision making; partners may disagree about way business should run

A

partnership

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15
Q

owned by stockholders; usually employ professional managers; owners risks limited to their initial investment; publicly owned corps, shareholders often have very litte influence on business decisions

A

corporations

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16
Q

record, sort, and file accounting information; specialize in various areas of accounting; require at least 1 year of accounting education

A

accounting clerks

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17
Q

supervise work of accounting clerks, perform daily accounting work, and summarize account information; small-med sized business may help interpret accounting information; requires 1-2 years of accounting education and some experience as accounting clerk

A

book keepers

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18
Q

provide accounting, auditing/tax services under direct supervision of accountant; requires 2 year degree/significant accounting/book keeping experience

A

paraaccountants

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19
Q

design accounting information system and focus on analyzing and interpreting information; enterfield with college degree in accounting. many states require 150 credit hours to sit for CPA exam, many also earning masters degree; can achieve professional status as certified public accountant and work for major accounting firms

A

accountants

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20
Q

accountants employed in:

A

public accounting, private managerial, governmental, and not for profit

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21
Q

servies offered to other business by public accountants

A

auditing, taxation, managment advisory services

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22
Q

reviewing company books to ensure correct policies and practices have been followed

A

auditing

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23
Q

tax specialists offer advice on tax planning, prepare tax returns and represents clients before governmental agencies

A

taxation

24
Q

offer advice to other business on a wide variety of managerial issues

A

management advisory services

25
Q

individual, association/organization that engages in economic activities and control specific economic resources

A

business entity

26
Q

itmes owned by business that will provide future benefits

A

assets

27
Q

amount of money owed to business by customers as result of making sales “on account” “on credit”

A

accounts receivable

28
Q

itmes owed, probable future outflow of assets as result of past transactions/events; debts/obligations of business that can be paid with cash,goods/services

A

liabilities

29
Q

unwritten promise to pay supplier for assets purchased/services rendered; referred to making a purchase “on account”

A

accounts payable

30
Q

written promises to pay suppliers/lenders specified sums of money at definite future time

A

notes payable

31
Q

amount by which business assets exceed liabilities; net worth; capital

A

owners equity

32
Q

economic event that has a direct impact on business; usually requires exchange with an outside entity; measured in dollars; affect the accounting equation through specific accounts

A

business transactions

33
Q

separate record used to summarize changes in each asset, liability and owners equity of a business

A

account

34
Q

provide a description of each type of account

A

account title

35
Q

3 questions

A
  1. what happened
  2. which accounts are affected
  3. how is accounting equation affected
36
Q

increase in asset is offeset by an increase in owners equity

A

investment by owner

37
Q

increase in asset is offset by decrease in another asset

A

purchase of asset for cash

38
Q

increase in asset is offset by increase in liability

A

purchase of asset on account

39
Q

decrease in asset is offset by decrease in a liability

A

payment on loan

40
Q

decrease owners equity

A

expenses; drawing

41
Q

increase owners equity

A

revenues; investments

42
Q

amount business charges customers for products sold/services performed; increases both assets and owners equity

A

revenues

43
Q

represents decrease in assets/increase in liabilities as result of efforts made to produce revenue; always decreases owners equity

A

expenses

44
Q

revenue greater than expenses

A

net income

45
Q

expenses greater than revenue

A

net loss

46
Q

concept that income determination can be made on a periodic basis

A

accounting period concept

47
Q

accounting period of 12 months

A

fiscal year

48
Q

owner taking cash/other assets from business for personal use; reduces owners equity and assets

A

withdrawals

49
Q

reports profitability of business operations for specific period of time; revenues and expenses; profit and loss statement, operating statement

A

income statement

50
Q

beginning capital, net income/loss, withdrawals, ending capital; reports activity that affected owners equity for specific period of time; uses net income from income statement

A

statement of owners equity

51
Q

confimrs accounting equation remained in balance; statement of financial position; statement of financial condition; reports assets, liabilities, and owners equity on specific date, not period of time

A

balance sheet

52
Q

identify accounts,classifying accounts, determine increase/decrease, enter transaction and verify balance

A

processing

53
Q

rev.-expense=net income

A

income statement

54
Q

beg. cap.+investments+net income-withdrawals=ending cap.

A

statement of owners equity

55
Q

assets=liabilities+owners equity

A

balance sheet

accounting (3 decks)

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