Intro to accounting

Question 1

What is accounting

Answer 1

• a system of dealing with financial information that is communicated to users
• two types: external and internal users

Question 2

examples of external users

Answer 2

• creditors
• investors
• bank
• financial institution
• researchers
• government
• external auditor

Question 3

what is a bank

Answer 3

a type of financial institution

Question 4

what is an external auditor

Answer 4

a person who comes to the company to verify/check the financial information is correct and sign off based on their opinion

Question 5

what is auditing

Answer 5

process of being an auditor

Question 6

examples of internal users

Answer 6

• owner of company
• internal auditor
• CFO
• manager

Question 7

what does an internal auditor do

Answer 7

makes sure no fraud is reported to the investors

Question 8

what is the CFO

Answer 8

chief financial officer

Question 9

what are the functions of accounting

Answer 9

1. recording transactions
2. summarize transactions into financial reports
3. interpret the reports
4. analyze data with numbers

Question 10

what are transactions

Answer 10

an event where something of value is exchanged for another thing of value

Question 11

what is booking keeping

Answer 11

• records transactions and summarizes financial reports

Question 12

what is an accountant

Answer 12

• the job of accounting

Question 13

how to become a accountant

Answer 13

• need to be designated
• to be designated you need to pursue an education after 4 years of uni/collage
• if you were a business major you don’t need to start from the beginning of the courses
• if you majored in something different you need to learn from the start

Question 14

what is CPA stand for

Answer 14

• chartered professional accountant
• in USA it is called chartered public accountant

Question 15

What was CPA before 2012

Answer 15

• CGA (certified general accountant)
• CMA (certified management accountant)
• CA (chartered accountant)

Question 16

what are the 4 major accounting firms

Answer 16

1. Price Waterhouse cooper (PWC)
2. Ernest & Young (EY)
3. KPMG
   4 Deloitle & Touche

Question 17

what are accounting firms

Answer 17

offers accounting services worldwide

Question 18

what does the CPA institution do

Answer 18

• admisiter titles or qualified candidates
• make sure accountant name stays in the system by doing a certain amount of hours every year
• develop standards and rules
• makes a file of the qualified people

Question 19

what was CPA institution before 2011

Answer 19

• GAAP (generally accepted accounting principals)
• every country has there own GAAP

Question 20

After 2011 what standards were made

Answer 20

• IFRS
• IASB
• ASPE
• ACSB

Question 21

what does IFRS stand for and when is it used

Answer 21

• international financial reporting system
• if a company is publicly traded
• need to disclose all information

Question 22

what does IASB stand for and what does it do

Answer 22

• international accounting standard board
• writes rules for IFRS

Question 23

what does ASPE stand for and when is it used

Answer 23

• accounting standards for private enterprise
• small/ private companies

Question 24

what does ACSB stand for and what does it do

Answer 24

• accounting Canadian standard board
• writes rules for ASPE

Question 25

what are assets

Answer 25

items or things a person or company owns that has value

Question 26

examples of short term assets

Answer 26

• listed in order of fastest liquidity
  examples:
• cash/bank (money)
• accounts receivable
• inventory
• supplies

Question 27

what does accounts receivable mean

Answer 27

the money the customer owns you

Question 28

long terms assets

Answer 28

• listed in order of whichever lasts longer
  examples:
  1. Land
  2. building
  3. furniture
  4. machinery/equipment
  5. vehicles/automobile
  6. computer

Question 29

what is a service business

Answer 29

provides intangible goods

Question 30

examples of service businesses

Answer 30

• uber
• moving trucks
• daycare
• doctors
• healthcare
• lawyer

Question 31

what does liquidity mean

Answer 31

how fast you can sell the item

Question 32

what are liabilities

Answer 32

the company’s debts

Question 33

examples of liabilities

Answer 33

• in order of what is payed off first
  examples:
  1. account payable (within 30 days)
  2. bank loan
  3. mortgage payable
  salaries payable (within a week)
  tax payable

Question 34

what is owner’s equity

Answer 34

• the owner’s net worth in the business
• the owner’s investment in the business
• the owner’s claim of the business

Question 35

what does account payable mean

Answer 35

• money a company owns the suppliers

Question 36

what is the fundamental accounting equation

Answer 36

• assets = liabilities + owners equity (money put in)
• A = L + OE

Question 37

what are creditors

Answer 37

people who you own money to

Question 38

What is a secured creditor

Answer 38

a creditor that makes you sign a contract saying that if you don’t pay off the debt the company can take your assets as compensation

Question 39

what are the 3 GAAPs

Answer 39

1. business entity
2. principal of conservatism
3. going concern/continuing concern

Question 40

what is business entity

Answer 40

personal affairs should be kept separately from business affairs which means that personal assets should not be on a business balance sheet

Question 41

what is principal of conservatism

Answer 41

a company should never overstate or understate it’s assets, liabilities, income and expenses

Question 42

what is going concern/continuing concern

Answer 42

a company assume that it will exist in the near future (meaning in 6 months or a year)