BUS 160 - Accounting

GAAP (Generally Accepted Accounting Principles)

aims to ensure that financial statements are: relevant, reliable, consistent and comparable

public accountants

an accountant who provides accounting services to individuals or businesses on a fee basis

Tax accounts

assist with tax preparation

Managerial accountants

assists managers and prepare internal company reports

Costs are deducted from revenue in several stages to show how net income is determined. The first step in this process is to deduct:

costs of goods sold

Balance Sheets usually organize liabilities into two broad categories, which are

current liabilities and long term liabilities

Accumulated Depreciation

decrease in the value of assets such as machinery, equipment and property over time

In the context of the calculation of the net income of a firm, the final step of the process comprises:

deducting the firm's interest expenses and taxes from its net operating income

Internal auditor

detects areas of waste, embezzlement, theft or mismanagement

external auditors

ensure financial statements are prepared correctly

____________ indicate the cash a firm spends, or other assets it uses up, to carry out the business activities necessary to generate its revenue

expenses

financial accountant

prepare accounting statements

Financial Accounting

prepares financial statements so that stakeholders can analyze the financial condition of the firm over a period of time

consultants

provide advise/support

In the context of statement of cash flows, cash flows from operating activities show the amount of cash that flow into the company from

sales revenue

Financial Accounting Standards Board (FASB)

the private board that establishes the generally accepted accounting principles(GAAP) used in the practice of financial accounting

Management Accountants

work within a company in a variety of accounting functions

current assets

Assets that companies expect to convert to cash or use up within one year.

In the context of balance sheets, which of the following is a difference between liabilities and owners' equity?

Liabilities indicate the claims outsiders have against the firm's assets, whereas owners equity refers to the claims the owners have against their firm's assets.

In which of the following ways do public accountants differ from the management accountants

Public accounts conduct external audits, whereas management accountants analyze the financial statements of their own organizaton

In the context of owners equity, which of the following is true of retained earnings?

They are accumulated earnings reinvested in a company rather than being paid to the owners