Accounting 203

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What is financial accounting?: The branch of accounting that focuses on information for people outside the firm.
What is managerial accounting?: The branch of accounting that focuses on information for internal decision makers.
What does FASB stand for?: Financial Accounting Standards Board
What does the FASB do?: It is a private organization that determines how accounting is practiced in the United States.
What does AICPA stand for?: American Institute of Certified Public Accountants
What is IMA stand for?: Institute of Management Accountants
What groups does the FASB work with?: IMA, AICPA, and SEC
What does GAAP stand for?: Generally Accepted Accounting Principles
What is GAAP?: The rules that govern public accounting principles.
What is a CMA?: A certified management accountant, licensed accountant that works for a single company.
What is an audit?: An examination of a companies financial situation.
What is a proprietorship?: A firm with a single owner that is liable for the actions of the firm.
What is a partnership?: Two or more individuals that are viewed as liable for the actions of the firm.
What is a Corporation?: A business owned by stockholders created through an article of incorporation, the corporation becomes the legal enity.
What is a stockholder or shareholder?: A person that owns stock in a corporation.
What is the: life of a corporation?: Indefinte
What is an: entity?: An organization or a section of an organization that viewed as a seperate economic unit.
What is the: entity concept?: The idea that an accounting entity stands apart as a seperate accounting unit.
What is the: reliability/objectivity principle?: The idea that data used for accounting should be based on the "most reliable data available"
What is the: cost principle?: The idea that acquired assets and services should be recorded at actual (historical) cost.
What is the: Going-Concern Concept?: Under the assumption of continued operation, assets will be used for their intended purpose.
What is the: stable monetary unit concept?: The idea that accountants assume that a currency is stable and do not consider inflation.
What are: assets?: Economic resources that are expected to be of benifit in the future.
What is the: accounting equation?: Assets = Liabilities + Owner's Equity
What are: liabilities?: An economic obligation (debt) payable to a party outside the business
What is: owner's equity?: The claim of a business owner to assets of the business or capital
What is: accounts receivable?: a promise to receive cash from a party that has received goods or services
What is: notes receivable?: a written promise for a future collection of cash
What is: accounts payable?: A liability backed by the credit standing of the debtor
What is: notes payable?: a written promise of future payment
What is: Revenue: Increase in owners equity through delivery of goods or services
What are: Owner Withdrawls: Amounts removed from the business by the owner, causing a decrease in stockholders equity
What are: Expenses: A decrease in owner's equity through use of assets or an increase in liabilities
What is a: Transaction: Any event that effects the financial position of a firm
What is the: Balance Sheet: The statement of financial position is a snapshot of the assets, liabilites and owners equity in a firm at a certian time.
What is: Net Income: Total Revenue - Total Expense = (Net Earnings,net income, net profit)
What is: Net Loss: if net earnings are negative
What is: Income Statement: The win/loss record for the company over a period of time. Summary of: revenue, expenses, net income, net loss. (Statement of Earnings)(Statement of Operations)
What is: Statement of Owner's Equity: Summary of changes in owner's equity over a period of time
What is: Statement of Cash Flows: Reports Cash receipts and cash payments over a during a period of time.
What is a proper heading for a financial statement?: Name of Firm

Name of Financial Statement

Date or Time Covered in the Statement
GAAP are formulated by the...: Financial Accounting Standards Board (FASB)
Which type of organization is owned by its stockholders?: Corporation
Which accounting concept states that we should record transactions at amounts that can be verified?: Cost Principle
The balance sheet report...: Financial position on a specific date
The income statement reports...: Results of operations for a specific period
What is accounting?: The information system that measures business activities, processed into reports and then communicated to decision makers.
What are financial statements?: Documents that report on a business in monetary amounts providing information to decision makers
What is a CPA?: A licensed accountant that serves the puclib rather than one particular company.
What is a shareholder?: A person that owns a stake in a company
What is a stockholder?: A person that owns a stake in a company
What is capital?: The claim of a business owner to the assets of a company... also known as stockholders equity.
matching principle: Guide to accounting for expenses.
1. Identify expenses during period
2. Match them against all revenues over the same period.
prepaid expense: Advance of payments of expenses
revenue principle: The basis for recording revenues; tells accountants when to record revenue and the amount of revenue to record.
time-period concept: Ensures that information is reported at regular intervals.
unearned revenue: Revenue that has been recorded by
accrual accounting: Accounting that records the impact of a businesss event as it occurs, regardless of whether the transaction affected cash.
Cash-basis accounting: Records transactions only when cash is received or paid.
Adjusting entry: An entry that attempts to adjust earnings and expenses so that statements reflect time-periods properly.
Types of adjusting entries: Prepaid and Accrual
1. Prepaid expenses
2. Depreciation
3. Accrued expenses
4. Accrued Revenues
5. Unearned revenues

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