Topic 1 Flashcards
Accounting information is used in _____.
decision making
Role of Accounting Information in Decision-Making for Investors
is to inform them of potential risks and losses, as well as profits, if they provide you with capital
Importance of Accounting Information for Decision-Making for Accountants
they can advise you in your owndecision-making
The_____cannot be isolated from the _____.
efficiency of planning anddecision making; availability and sufficiency ofaccounting information
is the branch of accounting that focuses on standardized reporting to provide information to external users
Financial Accounting
those that offer their stock for sale on various exchanges
Publicly Traded Companies
Publicly traded companies are required to prepare financial accounting reports and file them with the _____ for public viewing
Securities and Exchange Commission
Once the necessary economic information has been accumulated in a readable format, decision makers use this information to improve the _____.
decision-making process
Decisions made will impact future economic activities which will then find their way into the _____.
data accumulation process
Objectives to Achieve the Best Accounting Information System
- To process information efficiently at a low cost
- To obtain reports on a timely basis.
- To ensure a high degree of accuracy.
- To minimized the possibility of theft or fraud.
produces accounting information used by decision makers in making economic decisions and taking specific actions
Accounting Process
information describing the financial resources, obligations, and activities of an economic entity ( either an organization or an individual)
Financial Accounting
involves the development and interpretation of accounting information intended specifically to assist management in operating the business
Management Accounting
The preparation of income tax returns is a specialized field within accounting
Tax Accounting
are based on financial accounting information
Tax Returns
is an art of recording, classifying, and summarizing, in a significant manner and in terms of money, transactions and events which are, in part at least, of a financial character and interpreting the results thereof
Accounting
is the process of recording systematically the business transactions in the order of their occurrence
Bookkeeping
Four Phases of Accounting
- Identifying and Recording Transactions
- Sorting and Classifying Transactions
- Summarizing and Presenting
- Interpreting Data
The first step when dealing with financial statements
Identifying and Recording Transactions
- Groupings transactions by whether they represent income or expenses
- Categorizes transactions within those two groups into subgroups
- Records the expenses according to group and subgroup in the company’s ledger
Sorting and Classifying Transactions
- Summarize the information organized, generate graphs or charts as well as putting the information in an easy-to-read format
- Generates financial statements such as the balance sheet or cash flow sheet
Summarizing and Presenting
Final step in the financial statement process whether the business can reduce expenses or increase revenues
Interpreting Data
Types of Business Organization
- Single Proprietorship
- A Partnership
- A Corporation
is a type of business organization the business of which is owned by one person only
Single Proprietorship
Owner of Single Propritorship
Proprietor
is type of business organization whose business is owned by two or more persons
A Partnership
Owners of a Partnership
Partner
is a type of business organization, it is organized by at least five persons but not more than fifteen (15)
A Corporation
Capital of a Corporation
Capital Stocks
Capital stocks divided into units called _____.
shares
Owners of a Corporation
Stockholders
The Governing Body of a Corporation
Board of Directors
