Quiz 1 Flashcards
Which of the following best defines accounting according to the American Institute of Certified Public Accountants (AICPA)?
a. A process of interpreting financial statements
b. A service activity that provides financial information
c. The art of recording, classifying, summarizing, and interpreting financial transactions
c. The art of recording, classifying, summarizing, and interpreting financial transactions
What is the primary purpose of accounting as described by Ridhi Sikri?
a. To gather, store, and process financial data
b. To provide tax returns and advice
c. To prepare reports for regulatory bodies
d. To create business plans
a. To gather, store, and process financial data
What distinguishes bookkeeping from accounting?
a. Bookkeeping includes the preparation of tax returns
b. Bookkeeping involves the entire financial reporting process
c. Accounting involves the identification, recording, summarizing, and communicating of financial information
d. Bookkeeping involves external auditing
c. Accounting involves the identification, recording, summarizing, and communicating of financial information
Which of the following is an example of an internal user of accounting information?
a. Lenders
b. Business owners
c. Government agencies
d. Customers
b. Business owners
Which of the following is an example of an internal user of accounting information?
a. Lenders
b. Business owners
c. Government agencies
d. Customers
b. Business owners
Which accounting branch focuses on the analysis of costs associated with products or services?
d. Cost Accounting
A corporation has several advantages over other business forms. Which of the following is NOT an advantage of a corporation?
a. Limited liability for stockholders
b. Easier to raise funds
c. Lower shares mean lower profit share
d. Unlimited life
c. Lower shares mean lower profit share
Involves general record-keeping and the preparation of general-purpose financial statements.
Financial Accounting
Focuses on the preparation of financial reports and general record-keeping for government agencies.
Government Accounting
Focuses on the preparation of financial reports and general record-keeping for government agencies.
Government Accounting
The process of recording the transactions of a business.
Bookkeeping
Assumes that the business is distinct from its owners.
Separate Entity Concept
Transactions are recorded when they occur, regardless of when cash is exchanged.
Accrual Basis
Accounting estimates are made with caution, favoring potential unfavorable outcomes.
Prudence (or Conservatism)
Focuses on the analysis of costs related to products or services.
Cost Accounting
