Unit 1 Terms

Question 1

5 main activities in accounting

Answer 1

1. Gathering financial info
2. Preparing and collecting personal records
3. Rearranging, summarizing, and classifying financial info into a more usable form
4. Preparing information reports and summaries to help management reach decisions, serve the needs of groups outside the business, and measure profitability
5. Establishing controls to promote accuracy and honesty among employees

Question 2

4 types of business

Answer 2

1. Service
2. Merchandising
3. Manufacturing
4. Non-profit

Question 3

3 forms of business ownership

Answer 3

1. Sole proprietor
2. Partnership
3. Corporation

Question 4

Routine daily activities (3)

Answer 4

1. Paying bills
2. Daily banking
3. Recording transactions

Question 5

Periodic accounting activities (+ examples)

Answer 5

Occur at regulars intervals (pay cheques, financial reports- quarterly, income tax returns- annually)

Question 6

2 examples of miscellaneous activities

Answer 6

• employee resignation

- bankruptcy

Question 7

Accounting cycle (outer ring)

Answer 7

1. Transactions occur
2. Transactions recorded in journal
3. Journal entries posted to ledger accounts
4. Trial balance + interim financial statements prepared

Question 8

Accounting cycle (inner ring)

Answer 8

5. Worksheet prepared
6. Formal financial statements prepared
7. Ledger accounts adjusted + closed
8. Post-closing trial balance prepared

Inner circle tasks are done once a year, typically based on outer ring activities

Question 9

Accountant

Answer 9

Maintains and develops accounting systems
Interprets data and prepares reports
Supervises the work of accounting employees
Participates in management decisions

Question 10

Accounting

Answer 10

Process of gathering and preparing financial information about a business or other organization in a form that provides accurate and useful records and enables decisions to be made

Question 11

Accounting clerk

Answer 11

Ensures that transactions are properly recorded and the supporting documents are present and correct

Question 12

Accounting cycle define

Answer 12

Total set of accounting procedures that must be carried out during each fiscal period

Question 13

Audit

Answer 13

An examination of the accounting records and internal controls of a business in order to be able to be able to express an opinion about the business’s financial position and results of operation

Question 14

Fiscal period

Answer 14

Period of time over which earnings are measured

Question 15

Manufacturing business

Answer 15

Business that buys raw materials and converts it into new products, selling it to earn a profit

Question 16

Merchandising business

Answer 16

Business that buys goods and resells them to turn a profit

Question 17

Non-profit organization

Answer 17

An organization that carries out social or charity work and is not run for profit

Question 18

Partnership

Answer 18

A form of business in which two or more people share the ownership and operation of a business

Question 19

Producing business

Answer 19

A business which produces materials directly from natural resources

Question 20

Public accountant

Answer 20

An accountant who offers services professionally to the general public

Question 21

Service business

Answer 21

A business that sells a service, not a product

Question 22

Sole proprietorship

Answer 22

A business enterprise, the equity of which entirely belongs to one person