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29 Cards in this Set
- Front
- Back
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What is accounting? |
An information and measurement system that identifies, records, and communicates relevant, reliable, and comparable information about an organization's business activities. |
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What are the three main accounting activities? |
Identifying (select transactions and events) , recording (input, measure, and log) , and communicating (prepare, analyze , and interpret) |
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What is record-keeping / bookkeeping? |
The recording of transactions and events, either manually or electronically |
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List 13 external users of accounting information |
1. Shareholders and investors 2. Lenders 3. Directors 4. Customers 5. Suppliers 6. Regulators 7. Lawyers 8. Brokers 9. The Press 10. External auditors 11. Non executive employees 12. Voters , legislators and government officials 13. Contributors |
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What is financial accounting? |
The area of accounting aimed at serving external users by providing them with general purpose financial statements |
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Who are external users? |
External users of accounting information are not directly involved in running the organization |
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Who are internal users? |
Internal users of accounting information are those directly involved in managing and operating an organization such as the chief executive officer comma Chief Financial Officer, Chief audit executive, Treasurer, and other executive and managerial level employees |
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What is managerial accounting? |
The area of accounting that serves the decision-making needs of internal users |
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List 7 internal users |
1. Research and development managers 2. Purchasing managers 3. Human resource managers 4. Production managers 5. Distribution managers 6. Marketing managers 7. Service managers |
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What are the four main opportunities in accounting? |
Financial, managerial, taxation, and accounting-related |
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What is the three step process for making ethical decisions? |
1. Identify ethical concerns 2. Analyze options 3. Make ethical decision |
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What are the three sides to a fraud triangle? |
Opportunity, pressure or incentive, and rationalization or attitude |
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What are the four accounting principles? |
Measurement or cost principal , full disclosure, Revenue recognition, and expense recognition or matching principle |
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What is the measurement principle / cost principle? |
Prescribes that accounting information is based on actual cost |
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What is the revenue recognition principle? |
Revenue is recognized when earned |
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What is the expense recognition principle / matching principle? |
Prescribes that a company record the expenses incurred to generate the revenue reported |
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What is the full disclosure principle? |
Prescribes that a company report the details behind financial statements that would impact users decisions |
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What are four accounting assumptions? |
The going concern , monetary unit , time period , and business entity |
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What is the going concern assumption? |
Means that accounting information reflects a presumption that the business will continue operating |
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what is the monetary unit assumption? |
Means that we can express transactions and events in monetary or money units |
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What is the time period assumption? |
Presumes that the life of a company can be divided into time periods Such as months or years |
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What is the business entity assumption? |
Means that a business is accounted for separately from other business entities including its owner |
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What are two accounting constraints? |
Materiality , and benefit exceeds cost |
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What is the materiality constraint? |
Prescribes that only information that would influence the decisions of a reasonable person need to be disclosed |
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What is the benefit cost constraint? |
Prescribes that only information with benefits of disclosure greater than cost of providing it need to be disclosed |
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What is the expanded accounting equation? |
Assets= Liabilities+ Common Stock- Dividends + Revenue -Expenses |
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What is a statement of retained earnings? |
It reports information about how retained earnings changes over the reporting period, and shows beginning retained earnings, events that increase it, and events that decrease it. |
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What is the statement of cash flows? |
It reports cash flows from operating activities including inflows of cash and outflows of cash |
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What is double-entry accounting? |
Double Entry Accounting is a system that recognizes that for every economic ($) transaction at least two account categories are affected |
