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116 Cards in this Set

  • Front
  • Back
What is the process of identifying, measuring, recording, and communicating business activities?
What is the purpose of accounting?
To help people make decisions about economic activities
What are within the primary markets?
Investors and Financial Institutions; corporations
What are within the secondary markets?
Corporation not involved; just between buyers and sellers
What helps facilitate capital allocation?
Accounting Information
What are the primary, external users of accounting information?
Actual or potential Investors (stockholders and bondholders
Creditors (suppliers and lending institutions)
Other external users (financial analysts, advisors, brokers, underwriters, stock exchanges, taxing and regulatory authorities, labor unions, etc...)
What are internal users of accounting information?
Company managers
What are the two branches of accounting?
Financial and Managerial
What is the process of communicating financial accounting information about a company to external users?
Financial Reporting
What all statements are included in annual report?
Balance Sheet, Income Statement, Statement of Cash Flows, Statement of changes in stockholders' equity and notes to the financial statements
What summarizes a company's financial position at a given date or statement of financial position?
Balance Sheet
What summarizes the results of a company's income producing activities for a period of time?
Income Statement
What summarizes a company's cash inflows and outflows for a period of time?
Statement of Cash Flows
What summarizes the changes in each item of stockholders' equity for a period of time?
Statement of changes in stockholders' equity
What are the guidelines, procedures, and practices that a company is required to use in recording and reporting the accounting information in its audited financial statements?
Generally Accepted Accounting Principles (GAAP)
What define accepted accounting practices and provide a standard by which to report financial results?
What was replaced by SFAS 168 and Codification Project in 2009. The new codification reorganizes this into about 90 topical areas?
GAAP Hierarchy
Who was the first issued series of 51 Accounting Research Bulletins by for accounting standards (1938-1959)?
AICPA's Committee on Accounting Procedure
Who was the second board to issue a series of 31 opinions on accounting standards?
AICPA's Accounting Principles Board
Who is the present accounting standards board and issued Statements of Financial Accounting Standards; 168 of these standards?
Financial Accounting Standards Board
What does FASB issue now for standards?
Accounting Standards Updates (ASUs)
How many members did FASB originally consist of?
Have now?
7 now 5
How many members did APB consist of?
Which members are well paid (currently $550,000), fulltime, appointed for renewable 5 year terms?
Which members were volunteers and worked parttime?
Who was senior committee of the AICPA?
Who is not part of any single professional organization?
What members retained their private positions?
What members must sever all ties?
All of these members were required to be CPAs?
What members are not required to be CPAs?
What standards board takes care of timely, urgent issues?
How do we get new accounting rules (FASB's Due Process) 11 Steps?
Identify Topic, Appoint Task Force, Conduct Research, Issue Preliminary Views or Invitation to Comment, Hold Public Hearings, Deliberate on Findings, Issue Exposure Draft, Hold Public Hearings, Modify Exposure Draft, Vote (Simply Majority), and Issue Statement
What are not created in a vacuum and may not be "ideal"?
Accounting Standards
Who delegates its legal authority (granted by Congress) to set GAAP to the FASB?
Securities and Exchange Commission (SEC)
What are the SEC reporting requirements?
Form S-1 (registration statements), Form 10-K (annual reports), Form 10-Q (quarterly reports), Form 8-K (disclosures of significant events), Proxy statements (Form DEF 14A), Insider holdings and trading activity(Forms 3,4, &5)
What is a report used to describe any significant events that may effect the company (e.g., CEO fired)?
Form 8-K
What is a report used when management requests the right to vote through proxies for shareholders at stockholders' meetings?
Proxy statement
What is the professional organization for all certified public accountants in the United States?
American Institute of Certified Public Accountants (AICPA)
What was established in 1984 as a response by the FASB to criticisms that the Board did not always provide timely guidance on new accounting issues?
Emerging Issues Task Force (EITF)
What administers the Internal Revenue Code enacted by Congress?
Internal Revenue Service
What is an organization primarily of academics and practicing accountants?
American Accounting Association
What are when companies are becoming more international in their operations by producing, selling, and buying products and services in other countries?
International Accounting Standards Board (IASB)
What was established in 1984 and operates under the auspices of the Financial Accounting Foundation?
Governmental Accounting Standards Board (GASB)
What is a non-profit corporation that was created by Congress in the Sarbanes-Oxley Act of 2002; made because of Enron WorldCom?
Public Company Accounting Oversight Board (PCAOB)
What formalized the commitment to converge FASB and IASB standards in 2002?
Norwalk Agreement
What are the key FASB initiatives (6)?
1. Conducting long-term joint projects wth IASB 2. Participating in short-term joint convergence projects. 3. Monitoring IASB projects 4. Conducting convergence research project 5. Explicitly considering convergence potential in all decisions 6. Having a liaison IASB member on site at the FASB offices
Who is committed to high-quality international accounting standards?
Who has recommended that future accounting standards should not follow a rules-based or principles based only approach, but should be objectives - oriented?
Who has objectives to develop a conceptual framework of accunting theory and to establish standards (GAAP) for financial accounting practices?
What is when financial statements and other means of financial reporting should include explanations and interpretations by management to help external users understand the financial information provided?
Full disclosure
What provides a measure of overall company performance?
return on investment
What is the uncertainty or unpredictability surrounding a company's future results?
What is the ability of a company to use its financial resources to adapt to change?
Financial Flexibility
What refers to how quickly a company can convert its assets into cash to pay its bills?
What is the ability of a company to maintain a given physical level of operations?
Operating Capability
What is to be the overall qualitative characteristic for accounting information?
Decision Usefulness
What is when information has the potential to make a difference in a decision?
What are the three components of relevance?
Predictive value, Feedback value, Timeliness
What is if it can be used to correctly forecast the outcome of some event of a firm?
Predictive Value
What if it can confirm or correct prior expectations?
Feedback Value
What is when the user has access to it before a decision has to be made?
What is when information is reasonably free from error and bias and faithfully represents what it purports to represent?
What are the three components of reliability?
Verifiability, Representational Faithfulness, Neutrality
What is the information can be substantiated by accountants who can agree that the measurement method is without material error or bias?
What is a primary concern of the independent auditor?
What is the transaction reflects the economic substance rather than legal form?
representational Faithfulness
What is the information presented is unbiased?
What are the secondary qualitative characteristics of accounting information?
Comparability and Consistency
What is the information is similar across companies?
What is the information is similar across time?
What is qualitative?
What is quantitative?
What is the magnitude of an omission or misstatement of accounting information that makes it likely the judgement of a reasonable person relying on the information would have been influenced by the omission or misstatement?
What are the probable future economic benefits obtained and controlled by a company as a result of past transactions or events?
What are the probable future sacrifices of economic benefits arising from present obligations of a company to transfer assets or provide services in the future as a result of past transactions or events?
What is the owners' residual interest in the net assets of a company (assets - liabilities)?
What is the change in owners' equity from nonowner sources (not the same as net income)?
Comprehensive Income
What are inflows (enhancement of assets or settlement of liabilities) from delivering or producing goods, services, or other activities that represent the ongoing major or central operations of the entity (measured on an accrual basis)?
What are actual or expected cash outflows (or equivalent) that are the result of the entity's ongoing major or central operations (measured on the accrual basis)?
What result from peripheral or incidental transactions of an entity (other than additional investment or disinvestment) (measured on an accrual basis)?
Gains and losses
What is the entity assumption assumes that a proprietorship, partnership, or corporation's financial activities are distinguished from other financial organizations in keeping its own financial records and reports?
Economic Entity
What is assumption that assumes the company will continue to operate in the near future, unless substantial evidence to the contrary exists?
Going Concern
What is in accordance with this assumption, a company prepares financial statements at the end of meaningful and consistent time frame. This assumption is the basis for the adjusting entry process at period-end?
What is there must be some basis for measuring the exchange of goods or services. The reporting country's currency is the unit of exchange. Stable unit of measure?
Monetary unit
What is usually, the exchange price is retained in the accounting records as the value of an item until it is removed from the records?
Historical Cost
What is the revenue is recognized when realized or realizable and earned usually at the point of sale?
Revenue Recognition
What principle states that to determine the income of a company for an accounting period, the company computes the total expense involved in obtaining the revenues of the period and relates these total expenses to the total revenues recorded in the period?
Matching Principle
What is expenses are recognized due to cause and effect, due to systematic and rational allocation, and immediately?
Expenses Recognition
What states that when alternative accounting valuations are equally possible, the accountant should select the one that is least likely to overstate assets and income in the current period?
What information that could make a difference in the user's decision process must be disclosed, includes qualitative and non-financial information that is necessary to make the report complete and not misleading?
Full Disclosure
What is an industry specific reporting rule that differs from the general rules and has been approved by a standard setting body?
Industry Practice
What is Contributed Capital + Retained Earnings?
Stockholders' Equity
What is Beginning Retained Earnings + Net Income - Dividends?
Retained Earnings
What is Revenues - Expenses?
Net Income
What is a transfer of something valuable between parties?
What is an internal or external "happening" that affects the company?
Transactions and events are entered into the accounting system based on the details of related what?
Source Documents
Monetary amounts related to the transactions and events are stored in the accounting system using what?
What is a numbering system designed to organize accounts efficiently and effectively?
Chart of Accounts
What summarizes the results of a company's income-producing activities for an accounting period?
Income Statement
What summarizes the amounts of a company's assets, liabilities, and stockholders' equity on a particular date?
Balance Sheet
What summarizes a company's cash receipts and cash payments during the accounting period?
Statement of Cash Flows
What are the three categories for adjusting entries?
Accruals, Deferrals, and Estimated Items
What occur when revenues and expenses are recorded before cash is received or paid out( accrued rev. and exp.)?
What occur when revenues and expenses are recorded after cash is received or paid out (unearned or deferred revenues and prepaid expenses)?
What adjusting entries are depreciation and bad debt expense?
Estimated items
What are used to transfer temporary account balances to permanent accounts?
Closing Entries
What account is a temporary account that facilitates this process of closing entries?
Income Summary
What should be made for an AJE that creates/increases a balance sheet account?
Reversing Entries
What is customer receives refund for damaged goods returned?
Sales Return
What is customer receives refund for damaged goods retained?
Sales Allowance
What is discount is offered for prompt cash payment. The account is contra-sales revenue account that reduces Net Sales?
Sales (cash) Discount
What is sales less returns, allowances, and discounts?
net sales
What is beginning inventory + Net purchases - Ending Inventory?
Cost Of Goods Sold
What is purchases - purchase returns & allowances - purchase discounts?
Net Purchases