Introduction Flashcards
Give the definition of Accounting according to the Accounting Standards Council.
Accounting is a service activity. Its function is to provide quantitative information primarily financial in nature about economic entities that is intended to be useful in making economic decisions.
What is the basic accounting equation?
Revenue - Expenses = Net Income
Four natures of Accounting and why it is said as so.
Art - because it is a designed process with an output
Financial - because we are always talking about how much
Process - step-by-step procedures to write financial reports
Information system - record-keeping methodologies
What are the five functions of Accounting?
- Maintenance of systematic records
- Financial results of entity communicated
- Meeting legal requirements
- Protect assets of business
- Assistance to management
Who is the Father of Accounting?
Luca Bartolomeo de Pacioli
The branch of accounting that records business transactions and report the operations of the company in totality.
Financial Accounting
Which branch of accounting is concerned with collecting financial information to be used by the management for decision-making?
Management Accounting
This branch of accounting talks about the sacrifices, costs, and/or expenses of the company.
Cost Accounting
This branch of accounting is concerned with the disposition and receipt of public funds or funds of the government which can be used to generate public infrastructures.
Government Accounting
This branch of accounting is concerned with the verification, checking, and correction of financial statements.
Auditing
A subdivision of Auditing that is concerned with checking the operations of the company if it is in line with the management policies of the company.
Internal Auditing
A subdivision of auditing wherein a third party auditor verifies the financial statements of a company for accuracy and to determine whether it is correct or not.
External Auditing
This branch of accounting deals with computation of taxes, filing of taxes, and how to properly report tax information. It reports the totality of the process of taxation.
Tax Accounting
This branch of accounting teaches accounting, finance, and other technical and related subjects to students.
Accounting Education
This branch of accounting is concerned in the application of research information to accounting subdivisions.
Accounting Research
What are the two subcategories of Accounting Research?
Academic Accounting Research and Economic/Industrial Accounting Research
What are the two subcategories of Auditing?
Internal and External Auditing
This subcategory of accounting research applies accounting research findings in the academe.
Academic Accounting Research
This subcategory of accounting research applies accounting research results in the industry.
Economic/Industrial Accounting Research
Two major types of users of accounting information:
Internal and External Users
Users that provide capital to the business and assesses if the company needs additional funding.
Owners
These users need financial information because they plan and organize the firm, and use these information for decision-making.
Managers
These accounting information users looks at the financial information to keep track of investments.
Investors
These users are people that the company will borrow money from if they lack funds. They also assess the company’s financial situation with regards to financial obligations.
Creditors
Users that are curios about the business continuity.
Customers
Users that assess the company’s stability and ability to sustain employment.
Employees
Users curious about the company’s ability to purchase supplies.
Suppliers
These users look at financial information to assess company’s ability to pay tax due, and compliance to laws on tax and obligations.
Tax authorities
Users that assess financial rules and regulations, as well as the company’s compliance to public accountability.
Government
Users that are curious about the new, current, and rising business trends.
General Public
It is an unincorporated business that just has only one owner.
Sole proprietorship
Business organization with two or more persons that establish a contract to contribute money, property, or industry to a common fund, with the agreement to divide the profits among themselves.
Partnership
An artificial being created by operation of law, have rights to succession, and the powers, attributes, and properties expressly authorized by law or incidental to its existence.
Corporation
It is a people-centered enterprise owned, controlled, and run by and for their members to realize their common economic, social, and cultural needs and aspirations.
Cooperatives
