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ACC 102 > PRELIMS > Flashcards

PRELIMS Flashcards

1
Q

Explain Accounting

A

language of the business

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2
Q

differentiate economic entity to business entity

A

economic entity is both non profit and profit oriented while business is only profit oriented

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3
Q

what ere the phases or functions of accounting, explain each

A

recording, business transactions
classifying, sorting or grouping accounts
summarizing, preparing reports
interpreting, analytical function

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4
Q

explain the two users of accounting information

A

internal users make decisions directly affecting the internal operations of a business while
external users make decisions concerning their relationship to the enterprise

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5
Q

give examples on each two users of accounting information

A

internal users, corporate board of directors, employees, management
external users, investors, government agencies, creditors and suppliers

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6
Q

differentiate the three forms of business

A

sole proprietorship is own by one individual (proprietor)
partnership is owned by two or more individuals (partners)
corporation is owned by stockholders

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7
Q

selling people’s time

A

service operation

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8
Q

buying and selling product

A

trader/merchandise operation

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9
Q

designing products, aggregating components and assembling finished products

A

manufacturing

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10
Q

growing or extracting raw materials

A

raw materials production

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11
Q

selling the utilization of infrastracture

A

infrastructure

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12
Q

receiving deposits, lending and investing money

A

financial operations

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13
Q

pooling premiums of many to meet claims of a few

A

insurance

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14
Q

what are the branches of accounting

A

auditing, bookkeeping, government accounting, financial accounting, management accounting, taxation/tax accounting

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15
Q

what is auditing

A

ensures the fairness and reliability of the reports that the management submits to users

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16
Q

what is bookkeeping

A

collecting financial data, recording business transactions, and preparing financial statements

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17
Q

what is government accounting

A

concerned with the identification of the sources and uses of resources

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18
Q

what is financial accounting

A

focused on the recording of business transactions and the periodic preparation of financial reports

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19
Q

what is management accounting

A

incorporates cost accounting data and adopts them for specific decisions

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20
Q

what is taxation or tax accounting

A

preparation of tax returns and the consideration of the tax consequences of proposed transactions

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21
Q

what is the accounting guidelines

A

gaap or generally accepted accounting principles

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22
Q

what are the gaap criterias, explain each

A

relevant, useful info
objectivity, not influenced by personal bias
feasibility, practical

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23
Q

what are the fundamental accounting concepts

A

entity concept, periodicity concept, stable monetary unit concept, going concerns

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24
Q

what are the basic accounting principles

A

objectivity principle, historical cost, revenue recognition principle, expense recognition principle, adequate disclosure, materiality, consistency principle, matching principle

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25
Q

an organization that stands apart from other organizations as a separate economic unit

A

entity concept

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26
Q

divides the life of an entity to equal time periods, allows users to obtain timely data

A

periodicity concept

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27
Q

treats peso amounts as though each peso has the same purchasing power as any other peso

A

stable monetary unit concept

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28
Q

financial statements are prepared on the assumption that the business will continue to operate in the future, entity has neither the intention nor the need to enter liquidation or to cease trading

A

going concern

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29
Q

based on the most reliable data available so that they will be accurate and useful

A

objectivity principle

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30
Q

acquired assets should be recorded at their actual cost and not at what management thinks they are worth as at reporting date

A

historical cost

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31
Q

revenue is recognized in the accounting period when goods are delivered or services are rendered or performed

A

revenue recognition principle

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32
Q

expenses is recognized in which goods and services are used up to produce revenue and not when the entity pays for those goods and services

A

expenses recognition principle

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33
Q

requires that all the relevant information that would affect the user’s understanding be disclosed

A

adequate disclosure

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34
Q

financial reporting is only concerned with information that is significant enough to affect evaluations and decisions

A

materiality

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35
Q

firms should use the same accounting method from period to period to achieve comparability over time

A

consistency principle

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36
Q

gaap encompasses three things

A

conventions, rules, and procedures

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37
Q

it s a service activity whose function is to provide quantitative information, about economic entities that is intended to be useful in making economic decisions

A

accounting

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38
Q

what are the two qualitative characteristics of financial information

A

relevance and faithful representation

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39
Q

provides raw materials

A

raw materials production

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40
Q

take raw materials and produces them into goods

A

manufacturing

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41
Q

the given information to provide a meaningful and useful result

A

relevant

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42
Q

it is not influenced by the personal bias or judgments of those who provides it

A

objectivity

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43
Q

feasibility

A

the principle is practical

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44
Q

what are the components of faithful representation, explain each

A

completeness, all events are presented
neutrality, free from bias
freedom, free from error

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45
Q

what are the enhancing qualitative charateristic

A

comparability, consistency, verifiability, timeliness, understandability, cost and benefit analysis of financial reporting

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46
Q

in this concept, the inflation are being ignored

A

stable monetary unit concept

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47
Q

define the fundamental principles of the accounting profession

A 
integrity, straightforward an honest
objectivity, not allowing bias
professional competence and due care, maintain professional knowledge
confidentiality
professional behavior
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48
Q

what is the objective of accounting standards

A

it is to develop a uniform set of high quality, understandable and enforceable global accounting standards

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49
Q

IASB means

A

international accounting standards boards

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50
Q

FRSC means

A

financial reporting standards council

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51
Q

it was created to assist the boa to carry out its function and power

A

FRSC or financial reporting standards council

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52
Q

what is RA 9298 or the Philippine accountancy act of 2004

A

it is the creating of FRSC to assist the BOA to carry out the functions and power

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53
Q

what are the Philippine regulatory evidence

A

BIR, LGU, PICPA, SEC, DBM, BSP

54
Q

it ensure compliance of national taxes

A

bureau of internal revenue BIR

55
Q

it ensures payment of local business taxes

A

local government taxes LGU

56
Q

it is to regulate the information to all kinds of corporation, non profit or profit

A

security and exchange commission SEC

57
Q

it undertakes the formulation of the annual national budget and ensures the appropriate prioritization and allocation of funds

A

department of budget and management DBM

58
Q

it is to regulate all the operations of all banks and business import and export activities

A

bangko sentral ng pilipinas BSP

59
Q

it is to protect the credibility of cpa certificates

A

philippine institute of certified public accountants PICPA

60
Q

what are the financial statements

A

balance sheet, income statement, statement of changes in owners equity, statement of cash flows

61
Q

what is statement of financial performance

A

it is the result of operation or the income statement

62
Q

what is statement of financial position

A

it is the financial condition or position

63
Q

it is the owners capital or the additional investment, net loss or net income

A

statement of changes in the owners equity

64
Q

it summarizes the cash receipts and cash disbursements

A

statement of cash flows

65
Q

what are the elements of financial position

A

assets, liabilities, and owners equity

66
Q

what are the elements of financial performance

A

income and expenses

67
Q

it is the economic resources owned by the business that is expected for future gain

A

assets

68
Q

what are the elements of assets

A

control, past events, and future economic benefits

69
Q

what is the normal accounting period

A

one year

70
Q

what is liability

A

it is the obligations to pay, debt and claims of the creditors

71
Q

what are the elements of liability

A

present obligations and outflow of economic benefits

72
Q

what is owner’s equity

A

assets - liabilities = equity

73
Q

what is income and expenses

A

income is +A -L +E

expense is -A +L -E

74
Q

what are the measurement bases of elements of financial statements

A

measurement, historical cost, current cost, realizable value, settlement value, present value

75
Q

determining the elements which are to be recognized and carried in the balance sheet

A

measurements

76
Q

fair value of consideration given to acquire them

A

historical cost

77
Q

what is current cost

A

paid if the same or an equivalent asset was acquired currently

78
Q

what is realizable value

A

obtained by selling an asset in an orderly disposal

79
Q

what is settlement value

A

expected to be paid to satisfy the liabilities in the normal cost of business

80
Q

what is present value

A

presented discount value of the future net cash flows that the item is expected to generate in the normal course of business

81
Q

it is the identification or brief description of items that fall under the same kind, class or nature

A

account titles

82
Q

what are the account titles the fall under the assets of financial position

A

current assets: cash, cash equivalents, petty cash funds, notes receivable, accounts receivable, accrued income, allowance for uncollectible debts or bad debts, advances to employees, prepaid expenses, unused supplies
non current assets: ppe, land, building, machinery and equipment, furniture and fixtures, accumulated depreciation, intangible assets

83
Q

it is the average period of time required for a business to make an initial outlay

A

normal operating cycle

84
Q

it is the money, either in paper or in coins and money substitutes

A

cash

85
Q

it is the highly liquid assets that are readily convertible in cash

A

cash equivalents

86
Q

what is the risk of cash equivalents

A

changes in values because of changes in interest rates

87
Q

what is petty cash funds

A

these are the funds that are set aside for small expenses

88
Q

what is notes receivable

A

a promissory note that is received by the business from the customer

89
Q

what is accounts receivable

A

it is an oral or verbal promise to pay by a customer or client

90
Q

it is the asset offset or contra assets that shows deduction from the accounts receivable which is a current asset account

A

allowance for uncollectible accounts or doubtful act or bad debt

91
Q

what is accrued income

A

income earned but are not yet collected

92
Q

amount collectibles from employees for allowing to make cash advances which are deductible against their salaries and wages

A

advances to employees

93
Q

what is prepaid expenses

A

expenses that are prepaid in advance but are not yet incurred or expired

94
Q

what is unused supplies

A

cost of stationery purchased for use left on hand and still unused

95
Q

what are the non current assets

A

ppe, land, building, machinery and equipment, furniture and fixtures, accumulated depreciation, and intangible assets

96
Q

tangible asset for use in production or supply of goods and are expected to be used more than one period

A

property plan and equipment

97
Q

the site where the building used as office or store is constructed

A

land

98
Q

a finished construction where operations and transactions took place

A

buildings

99
Q

differentiate machinery and equipment to furniture and fixtures

A

machinery and equipment are tools used in making products while
furniture and fixtures are tools used in helping or giving service to people

100
Q

it is a contra asset called valuation account which is a deduction from ppe

A

accumulated depreciation

101
Q

what are the depreciable assets or fixed assets

A

all except land

102
Q

these are the non monetary assets without physical assets

A

intangible assets

103
Q

what are the account titles that falls under the current liabilities of liability

A

account payable, notes payable, accrued expenses, unearned income

104
Q

an oral or verbal promise to pay by the business

A

accounts payable

105
Q

a promissory note issued by the enterprise

A

notes payable

106
Q

expenses incurred by the enterprise but are not yet paid

A

accrued expenses

107
Q

what is unearned income

A

income collected but not yet considered as earned

108
Q

what are the two non current liabiliies

A

notes payable and mortgage payable

109
Q

it requires a fixed or tangible property to be pledged as collateral to ensure payment

A

mortgage payable

110
Q

what are the account titles that falls under the income or revenues

A

service income, professional income, rental income. interest income

111
Q

what are the account titles that falls under the expense

A

supplies expenses, rent expenses, repairs and maintenance, salaries expense, uncollectible accounts, depreciation expense, taxes and licenses, insurance expense, utilities expense

112
Q

what is the accounting equation

A

assets = liabilities + equity

113
Q

what is the normal balance of assets

A

debit

114
Q

what is the normal balance of liability

A

credit

115
Q

normal balance of equity or capital

A

credit

116
Q

normal balance of expense

A

debit

117
Q

normal balance of income

A

credit

118
Q

normal balance of withdrawal

A

debit

119
Q

what is service income

A

all types of income from rendering services

120
Q

professional income

A

by professionals earned by their practice of their profession

121
Q

rental income

A

income earned by the buildings

122
Q

interest income

A

income received from an amount of money borrowed

123
Q

supplies expense

A

cost of supplies

124
Q

rent expense

A

amount paid or incurred for use of property

125
Q

repairs and maintenance

A

expenses incurred in repairing or servicing the building

126
Q

salaries expense

A

compensation given to employees by the business

127
Q

uncollectible accounts

A

the anticipated loss that the business may incur

128
Q

depreciation expenses

A

portion of the cost of ppe or fixed assets that has expired

129
Q

taxes and licenses

A

amount paid for business permits

130
Q

insurance expense

A

the expired portion of the insurance premium paid

131
Q

utilities expense

A

for telephones, water, light bills

ACC 102 (1 decks)

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