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35 Cards in this Set
- Front
- Back
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(T/F) Bookkeeping is the same thing as Accounting. |
False- Since, bookkeeping is only part of accounting; Accounting also summarizes and interprets. |
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The major disadvantage of the corporate form of business organization is ________ _________. |
double taxation |
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Keeping records for a business separate from the owner's personal affairs is in keeping with the __________ _________ principle. |
business entity |
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Using an invoice, rather than the seller's opinion of the value to document the value of equipment is based on __________ _________. |
objective evidence |
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Changing inventory valuation methods year after year violates the ___________ principle. |
consistency |
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Recording accrued payroll at the end of the month is based on the __________ principle. |
matching |
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6 Branches of Accounting |
1. Financial 2. Cost 3. Managerial 4. Tax 5. Auditing 6. Accounting Systems |
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____________ accounting records, classifies, and summarizes transactions. |
Financial |
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Cost accounting records, classifies, __________, _________ current and prospective costs. |
allocates, reports |
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___________ accounting provides information to _____________ to enhance control. |
Managerial, various levels of management |
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Tax accounting involves... |
the preparation and filing of tax returns, including to minimize tax payments |
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_________ accounting reviews, evaluates documents, records and controls systems. |
Auditing |
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__________ ___________ review information systems. |
Accounting systems |
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4 Forms of Business Organizations |
1. Sole proprietorship 2. Partnership 3. Limited Liability Companies 4. Corporations |
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Sole Proprietorship... |
most common, single owner, easy to form, owner and business are one, no business income tax, unlimited liability, and may be difficult to raise capital. |
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Partnerships... |
have 2 or more people, all partners responsible for debt, no business income tax (files individually), and unlimited liability. |
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Limited Partnerships... |
are similar to partnerships except 1 partner is limited and at least 1 is general (full liability), and limited partners cannot manage business. |
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Limited Liability Companies (LLC)... |
have the tax treatment of partnership, no business income tax, and limited liability. |
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Corporation |
has limited liability, life independent of owners, controlled by a board of directors, owners only taxed on distribution, double taxation, business income tax and dividends, overcome by forming S corporation if under 100 shareholders and only 1 class of stock. |
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The Cost Principle means... |
to record the transaction at actual cost |
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Business entity is... |
separate from the owner |
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Going concern means... |
business will continue indefinitely |
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Unit of measurement... |
$- the monetary unit |
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Objective Evidence |
such as an invoice |
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Full disclosure |
significant items |
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Consistency principle |
means to keep the same accounting method each period |
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The matching principle... |
expenses matched with revenues |
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Conservatism |
expenses and losses as soon as possible, but revenues until ensures |
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Materiality principle |
to "make a difference" or change |
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3 Financial Statements |
1. Balance Sheet 2. Income Statement 3. Statement of Cash Flows |
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Balance sheet shows... |
a moment in time (snapshot) |
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Income statement shows... |
[a video] of Revenues and Expenses over a period of time |
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Statement of Cash Flows shows |
[a video] of the cash Inflows and Outflows over a period of time |
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Cash is recorded when it is __________. Accruals are recorded when ____________. |
received, an event occurs (cash earned, expenses incurred; when cash is actually received is not a factor) |
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The fundamental accounting equation is... |
Assets = Liabilities - Owner's Equity |
