Introduction to College Accounting Chapter #1 (21st edition Heintz | Parry)

Merchandising business

A business it buys products to sell

Manufacturing business

A business that makes a product to sell

Service business

A business that provides a service

Certified fraud examiner (CFE)

A forensic accountant who has passed the exam offered by the association of certified fraud examiner's

Para-accountant

A paraprofessional who provides many accounting, auditing, or tax services under the direct supervision of an accountant.

Certified accountant (CPA)

A public accountant who has met certain educational and experience requirements and has passed and examination prepared by the American Institute of certified public accountant's.

Forensic accounting

A specialized field that combines fraud detection, fraud prevention, litigation support, expert witnessing, business valuations, and other investigative activities

Accounting standards update

A standard issued by the financial accounting standards Board. The standards must be followed when preparing financial statements. The updates are included in the FASB accounting standards codification.

Accounting

A system of gathering financial information about a business and reporting this information to users

Partnership

A type of ownership structure in which more than one person owns the business

Sole proprietorship

A type of ownership structure in which one person owns the business

Corporation

A type of ownership structure in which stockholders own the business. The owners risk is usually limited to their initial investment, and they usually have very little influence on the business decisions.

Accounting information system

Accountants in this area design and implement manual and computerized accounting systems.

Certified management accountant (CMA)

An accountant who has passed and examination offered by the Institute of management accountants

Sarbane's-Oxley act (SOX)

An act passed by Congress to help improve reporting practices of public companies

Certified internal auditor (CIA)

An internal auditor who has achieved professional recognition a passing the uniform examination offered by the institute of internal auditors.

Summarizing

Bringing the various items of information together to determine a result

Identify career opportunities in accounting

Career opportunities in accounting include work in public accounting, private accounting, and governmental and not-for-profit accounting

Interpreting

Deciding the meaning and importance of the information in various reports

Accountant

Designs the accounting information system and focuses on analyzing and interpreting information

Cost accounting

Determining the cost of producing specific products or providing services and analyzing for cost-effectiveness.

Classify different types of businesses by activities

Different types of businesses classified by activities are a service business, a merchandising business, and a manufacturing business.

Drafting- step #3 in Writing Skills AND Break- step #4 in Writing Skills

Drafting and Break

Recording

Entering financial information about events affecting the company into the accounting system

Public hearing

Following the issuance of a decision memorandum, public meetings are often held by FASB to gather opinions on the accounting issue.

Define GAAP and describe the process used by FASB to develop these principles

Generally excepted accounting principles (GAAP) are the rules that businesses must follow when preparing financial statements. FASB takes the following steps to develop an accounting standard: 1. The issue is placed on the board agenda. 2. After researching the issue, a decision memorandum is issued. 3. Public hearings are held. 4. An exposure draft is issued. 5. The statement of financial accounting standards is used.

Bookkeeper

Generally supervisors the work of accounting clerk's, helps with daily accounting work, and summarizes accounting information

Financial accounting

Includes preparing various reports and financial statements in analyzing operating, investing, and financing decisions.

Analyzing

Looking at events that have taken place and thinking about how they affect the business.

Managing Step #1 In Writing Skills

Managing

1. Analyzing-B 2. Recording-F 3. Classifying-E 4. Summarizing-D 5. Reporting-A 6. Interpreting-C A. Telling the results B. Looking at events that have taken place and thinking about how they affect the business C. Deciding the importance of the various reports D. Aggregating many similar events to provide information that is easy to understand E. Sorting and burping like items together F. Entering financial information into the accounting system

Match the following steps of the accounting process with their definition 1. Analyzing 2. Recording 3. Classifying 4. Summarizing 5. Reporting 6. Interpreting A. Telling the results B. Looking at events that have taken place and thinking about how they affect the business C. Deciding the importance of the various reports D. Aggregating many similar events to provide information that is easy to understand E. Sorting and burping like items together F. Entering financial information into the accounting system

Owners-D. The firms current financial condition Managers-B. Detailed, up-to-date information to measure business performance Creditors-A. Whether the firm can pay its bills on time Government agencies-C. To determine taxes to be paid and whether other regulations are met

Match the following users with the information needed. #1. Owners #2. Managers #3. Creditors #4. Government agencies A. Whether the firm can pay its bills on time B. Detailed, up-to-date information to measure business performance C. To determine taxes to be paid and whether other regulations are met D. The firms current financial condition

Planning. Step #2 in Writing Skills (continued)

Planning (4 steps) (steps 3 & 4)

Planning. Step #2 in Writing Skills

Planning (4 steps)(steps 1 & 2)

Generally excepted accounting principles (GAAP)

Procedures and guidelines developed by the Financial Accounting Standards Board to be followed in the accounting and reporting process

Management advisory services

Providing advice to businesses on a wide variety of managerial issues

Analyzing recording Classifying Summarizing Reporting Interpreting

Put the following six major steps of the accounting process in order: Recording Summarizing Reporting Analyzing Interpreting Classifying

Accounting clerk

Records, sorts, and files accounting information

Auditing

Reviewing and testing to be certain that proper accounting policies and practices have been followed

Internal auditing

Reviewing their operating in accounting control procedures adapted by management to make sure the controls are adequate and being followed; assuring that accurate and timely information is provided

Revising-step #5 in Writing Skills

Revising

Taxation

See tax accounting

Tax accounting

Services focused on tax planning, preparing tax returns, and dealing with the Internal Revenue Service and other governmental agencies.

Classifying

Sorting and grouping similar items together rather than merely keeping a simple common diary-like record of numerous events.

Reporting

Telling the results of the financial information

Preliminary views

The first document issued by FASB when developing an accounting standard. This document identifies the pros and cons of various accounting treatments for an event and invites others to comment.

Budgeting

The process in which accountants help managers develop a financial plan.

Describe the purpose of accounting

The purpose of accounting is to provide financial information about a business to individuals and organizations

Describe the accounting process

The six major steps of the accounting process are analyzing, recording, classifying, summarizing, reporting, and interpreting

Financial accounting standards Board accounting standards codification

This codification is an electronic database that provides one authoritative source for the standards which must be followed by US companies.

Exposure draft

This document explains the rules that FASB believes firms should follow in accounting for a particular event. Based on the responses to the exposure draft, the Board will decide if any changes are necessary before issuing a final standard.

Define three types of business ownership structure's

Three types of business ownership structures are the sole proprietor ship, the partnership, and the corporation

Controller

the accountant who oversees the entire accounting process and is the principle accounting officer of a company