accounting ch.1-3 vocab&some online work
financial accounting standards board (fasb)
a private organization that establishes generally accepted accounting principles in the US
amounts due from customers
accounts receivable
is the situation correct, if not which principle or assumption makes it right, and if it is correct which principle or assumption is represented? galavan inc. owns investment securities that are worth much more than they originally cost. in an effort to provide more relevant information, galavan reports the investments at fair value in its accounting reports.
correct, fair value principle
is the situation correct, if not which principle or assumption makes it right, and if it is correct which principle or assumption is represented? pennyworth corporation reports its revenues using numbers and descriptions that match what really happened.
correct, faithful representation
is the situation correct, if not which principle or assumption makes it right, and if it is correct which principle or assumption is represented? kingston company includes in its accounting records only transaction data that can be expressed in terms of money
correct, monetary unit assumption
which type of user would ask these questions? should we grant credit to this new customer?
external
which type of user would ask these questions? which company should we invest in?
external
true or false statement. a business owned by two or more persons associated as partners is a corporation
false
true or false statement. a department store is an example of a manufacturing company
false
true or false statement. a merchandising company converts raw materials into finished goods to sell to customers
false
true or false statement. managerial accounting provides reports to help investors and creditors evaluate a company
false
true or false statement. the standards of conduct by which actions are judged as loyal or disloyal are ethics
false
true or false statement. the three steps in the accounting process are identification, recording, and examination
false
true or false statement. congress passed the Sarbanes-Oxley Act to ensure that investors invest only in companies that will be profitable
false
true or false statement. the primary accounting standard-setting body in the US in the securities and exchange commission (SEC)
false
what does FBI stand for?
federal bureau of investigation
what does FASB stand for?
financial accounting standards board
a common set of standards that provides guidelines to accountants and indicates how to report economic events is called ________
generally accepted accounting principles
what does IRS stand for?
internal revenue service
identify each company as being service, merchandising, or manufacturing. general motors
manufacturing
identify each company as being service, merchandising, or manufacturing. urban outfitters
merchandising
investments by owner
the assets an owner puts into the business
credit
the right side of an account
true or false statement. the two most common types of external users are investors and creditors
true
which type of user would ask these questions? can we hire more employees?
internal
which type of user would ask these questions? what price should we charge for our new product?
internal
which type of user would ask these questions? which product line should we emphasize?
internal
indicate if the events are considered business transactions. hire a new employee
no
assets
resources that a company owns
net loss
the amount by which expenses exceed revenues
transactions
the economic events of a business that are recorded by accountants
management consulting
an area of public accounting ranging from development of accounting and computer systems to support services for marketing projects and merger and acquisition activities
monetary unit assumption
as assumption stating that companies include in the accounting records only transaction data that can be expressed in terms of money
classify each item as an asset, liability, or owner's equity. accounts receivable
asset
classify each item as an asset, liability, or owner's equity. cash
asset
classify each item as an asset, liability, or owner's equity. equipment
asset
classify each item as an asset, liability, or owner's equity. supplies
asset
identify if the item is an asset, liability, or owner's equity buildings
assets
expanded accounting equation
assets=liabilities+owner's capital-owner's drawings+revenues-expenses
basic accounting equation
assets=liabilities+owner's equity
identify the task with the public accounting job area like auditing, taxation, or management consulting. examining financial statements and provides as opinion
auditing
the three major services rendered by a certified public accountant are ___, ___, and ___
auditing, management consulting, and taxation
identify if the items would appear on the income statement, balance sheet, and/or owner's equity statement. accounts payable
balance sheet
identify if the items would appear on the income statement, balance sheet, and/or owner's equity statement. accounts receivable
balance sheet
identify if the items would appear on the income statement, balance sheet, and/or owner's equity statement. cash
balance sheet
identify if the items would appear on the income statement, balance sheet, and/or owner's equity statement. notes payable
balance sheet
identify if the items would appear on the income statement, balance sheet, and/or owner's equity statement. supplies
balance sheet
what does CPA stand for?
certified public accountant
identify if the accounting task is part of the identification, recording, or communication activities. analyzing and interpreting information
communication
identify if the accounting task is part of the identification, recording, or communication activities. explaining uses, meaning, and limitations of data
communication
identify if the accounting task is part of the identification, recording, or communication activities. preparing accounting reports
communication
identify if the accounting task is part of the identification, recording, or communication activities. reporting information in a standard format
communication
identify if the characteristics describe a proprietorship, partnership, or corporation. is a separate legal entity
corporation
identify if the characteristics describe a proprietorship, partnership, or corporation. most of the largest companies in the US
corporation
identify if the characteristics describe a proprietorship, partnership, or corporation. ownership is divided into transferable shares of stock
corporation
is the situation correct, if not which principle or assumption makes it right, and if it is correct which principle or assumption is represented? falcone company includes in its accounting records only transaction data that can be expressed in terms of money.
correct, monetary unit assumption
liabilities
creditor claims against assets; are existing debts and obligations
list the effects the transaction has on assets, liabilities, and owner's equity. cash
decreases assets, no effect on liabilities and owner's equity
the _____ assumption requires that the activities of an entity be kept separate from the activities of its owner
economic entity
which type of user would ask these questions? is the company we invested in profitable?
external
identify which users would ask these questions. did the company earn a satisfactory income?
external users
identify which users would ask these questions. how does the company's profitability compare to other companies?
external users
identify which users would ask these questions. will the company be able to pay its short-term debts?
external users
identify the description with the accounting career opportunity like public accounting, private accounting, governmental accounting, or forensic accounting. catch perpetrators of theft and fraud
forensic accounting
identify the description with the accounting career opportunity like public accounting, private accounting, governmental accounting, or forensic accounting. often have FBI and IRS experience
forensic accounting
what does GAAP stand for?
generally accepted accounting principles
identify the description with the accounting career opportunity like public accounting, private accounting, governmental accounting, or forensic accounting. includes working for the SEC and as an educator at a public university
governmental accounting
the ____ states that assets should be recorded at the value exchanged at the time the asset is acquired
historical cost principle
identify if the accounting task is part of the identification, recording, or communication activities. selecting economic activities relevant to the company
identification
identify if the items would appear on the income statement, balance sheet, and/or owner's equity statement. advertising expense
income statement
identify if the items would appear on the income statement, balance sheet, and/or owner's equity statement. rent revenue
income statement
identify if the items would appear on the income statement, balance sheet, and/or owner's equity statement. service revenue
income statement
is the situation correct, if not which principle or assumption makes it right, and if it is correct which principle or assumption is represented? butch gilzean, the owner of gilzean photography, records his personal living costs as expenses of the business.
incorrect, economic entity assumption
is the situation correct, if not which principle or assumption makes it right, and if it is correct which principle or assumption is represented? roger holloway, owner of roger's photography, records his personal living costs as expenses of the business
incorrect, economic entity assumption
is the situation correct, if not which principle or assumption makes it right, and if it is correct which principle or assumption is represented? bullock company owns buildings that are worth much more than they originally cost. in an effort to provide more relevant information, bullock reports the buildings at fair value in its accounting reports.
incorrect, historical cost principle
is the situation correct, if not which principle or assumption makes it right, and if it is correct which principle or assumption is represented? tisinai company owns buildings that are worth substantially more than they originally cost. in an effort to provide more relevant information, tisinai reports the buildings at fair value in its accounting reports
incorrect, historical cost principle
is the situation correct, if not which principle or assumption makes it right, and if it is correct which principle or assumption is represented? dent company does not report in its financial statements some financial information that is capable of making a difference in a decision.
incorrect, relevance
list the effects the transaction has on assets, liabilities, and owner's equity. purchases office furniture for cash
increases assets and decreases assets
list the effects the transaction has on assets, liabilities, and owner's equity. purchase office supplies on account
increases assets and liabilities, no effect on owner's equity
list the effects the transaction has on assets, liabilities, and owner's equity. purchased computer equipment on account
increases assets, increases liabilities, and no effect on owner's equity
list the effects the transaction has on assets, liabilities, and owner's equity. supplies
increases assets, no effect on liabilities and owner's equity
list the effects the transaction has on assets, liabilities, and owner's equity. computer equipment
increases assets, no effect on liabilities or owner's equity
list the effects the transaction has on assets, liabilities, and owner's equity. insurance
increases assets, no effect on liabilities or owner's equity
list the effects the transaction has on assets, liabilities, and owner's equity. made a cash investment in the business
increases assets, no effect on liabilities, and increases owner's equity
list the effects the transaction has on assets, liabilities, and owner's equity. made cash investment to start a business
increases assets, no effect on liabilities, and increases owner's equity
which type of user would ask these questions? will we have enough cash to pay our bills?
internal
which external users would ask these questions? is the company complying with tax laws?
internal revenue service
identify which users are external or internal. marketing manager
internal users
identify which users are external or internal. production supervisor
internal users
identify which users are external or internal. store manager
internal users
identify which users are external or internal. vice president of finance
internal users
identify which users would ask these questions. can we afford to give our employees a pay raise?
internal users
identify which users would ask these questions. do we need to borrow in the near future?
internal users
identify which users would ask these questions. what does it cost us to manufacture each unit produced?
internal users
identify which users would ask these questions. which product should we emphasize?
internal users
which external users would ask these questions? is the company a good investment?
investor
sarbanes-oxley act (sox)
law passed by congress intended to reduce unethical corporate behavior
classify each item as an asset, liability, or owner's equity. accounts payable
liability
classify each item as an asset, liability, or owner's equity. notes payable
liability
classify each item as an asset, liability, or owner's equity. salaries and wages payable
liability
identify if the item is an asset, liability, or owner's equity sales taxes payable
liability
identify if the item is an asset, liability, or owner's equity utilities payable
liability
identify the task with the public accounting job area like auditing, taxation, or management consulting. installing accounting software
management consulting
identify the task with the public accounting job area like auditing, taxation, or management consulting. performing support activities for acquisitions
management consulting
identify each company as being service, merchandising, or manufacturing. caterpillar
manufacturing
identify each company as being service, merchandising, or manufacturing. chemical plant
manufacturing
identify each company as being service, merchandising, or manufacturing. furniture factory
manufacturing
identify each company as being service, merchandising, or manufacturing. sporting goods store
merchandising
indicate if the events are considered business transactions. visit customer to provide an estimate
no
list the effects the transaction has on assets, liabilities, and owner's equity. received monthly utility bill to be paid at later time
no effect on assets, increases liabilities, and decreases owner's equity
amounts owed to bank
note payable
faithful representation
numbers and descriptions match what really existed or happened- they are factual
classify each item as an asset, liability, or owner's equity. owner's capital
owner's equity
identify if the item is an asset, liability, or owner's equity owner's drawings
owner's equity
identify if the items would appear on the income statement, balance sheet, and/or owner's equity statement. drawings
owner's equity statement
identify if the items would appear on the income statement, balance sheet, and/or owner's equity statement. owner investment
owner's equity statement
drawings
owner's withdrawals of cash or other assets for personal use; decrease owner's equity
identify if the characteristics describe a proprietorship, partnership, or corporation. an agreement sets forth initial investment and withdrawal procedures
partnership
identify the description with the accounting career opportunity like public accounting, private accounting, governmental accounting, or forensic accounting. perform activities such as cost accounting, budgeting, and tax planning
private accounting
identify if the characteristics describe a proprietorship, partnership, or corporation. no legal distinction between owner and business
proprietorship
identify if the characteristics describe a proprietorship, partnership, or corporation. only a relatively small amount of capital is needed
proprietorship
identify the description with the accounting career opportunity like public accounting, private accounting, governmental accounting, or forensic accounting. perform auditing, tax services, and management consulting for clients
public accounting
identify if the accounting task is part of the identification, recording, or communication activities. classifying economic events
recording
identify if the accounting task is part of the identification, recording, or communication activities. keeping a systematic chronological diary of events
recording
identify if the accounting task is part of the identification, recording, or communication activities. measuring events in dollars and cents
recording
identify if the accounting task is part of the identification, recording, or communication activities. summarizing economic events
recording
accounting is an information system that identifies, ___, and ___ the economic events of an organization
records and communicates
which external users would ask these questions? is the company operating within prescribed guidelines?
regulatory agency
what does SEC stand for?
securities and exchange commission
identify each company as being service, merchandising, or manufacturing. computer repair business
service
identify each company as being service, merchandising, or manufacturing. interior design firm
service
identify each company as being service, merchandising, or manufacturing. jiffy lube
service
list the four services performed by a private accountant.
tax preparation, cost accounting, budgeting, and tax planning
identify the task with the public accounting job area like auditing, taxation, or management consulting. providing tax advice
taxation
identify the task with the public accounting job area like auditing, taxation, or management consulting. representing clients before the IRS
taxation
net income
the amount by which revenues exceed expenses
t-account
the basic form of an account
expenses
the cost of assets consumed or services used in the process of earning revenue; decrease owner's equity from operating the business
auditing
the examination of financial statements by a certified public accountant in order to express an opinion as to the fairness of presentation
financial accounting
the field of accounting that provides economic and financial information for investors, creditors, and other external users
managerial accounting
the field of accounting that provides internal reports to help users make decisions about their companies
revenues
the gross increase in owner's equity resulting from business activities entered into for the purpose of earning income, such as selling merchandise, performing services, renting property, and lending money
accounting
the information system that identifies, records, and communicates the economic events (the numbers) of an organization to interested users
owner's equity
the ownership claim on total assets, that is, the amount of total assets remaining after creditor claims to the assets are satisfied
ethics
the standards of conduct by which actions are judged as right or wrong, honest or dishonest, fair or not fair
accountants refer to an economic event as a ...
transaction
debit-credit analysis
translate the increases and decreases from basic analysis and equation analysis of a transaction into debits and credits
true or false statement. a business owned by one person is generally a proprietorship
true
true or false statement. a landscaping company is an example of a service company
true
true or false statement. internal users include human resources managers
true
true or false statement. the accounting process includes the bookkeeping function
true
true or false statement. the historical cost principle dictates that companies record assets at their cost and continue to report them at their cost over the time the assets are held
true
true or false statement. the monetary unit assumption requires that companies record only transactions that can be measured in monetary units
true
indicate if the events are considered business transactions. pay for phone bill
yes
indicate if the events are considered business transactions. purchase cleaning supplies on account
yes
party to whom money is owed
creditor
which external users would ask these questions? is the company able to pay its debts?
creditor
list the effects the transaction has on assets, liabilities, and owner's equity. paid secretary weekly salary
decreases assets, no effect on liabilities and decreases owner's equity
a private accountant can perform many activities in a business organization but would not work in ....
external auditing
identify which users are external or internal. customers
external users
identify which users are external or internal. internal revenue service
external users
identify which users are external or internal. labor unions
external users
identify which users are external or internal. securities and exchange commission
external users
identify which users are external or internal. suppliers
external users
relevance
financial information that is capable of making a difference in a decision
identify if the items would appear on the income statement, balance sheet, and/or owner's equity statement. interest expense
income statement
identify each company as being service, merchandising, or manufacturing. pharmacy
merchandising
accountants who are employees of business enterprises are referred to as ___ accountants
private (or managerial)
identify if the characteristics describe a proprietorship, partnership, or corporation. owner is manager/operator
proprietorship
debit
the left side of an account
pharoah travel agency purchased land for $92500 cash on december 10, 2022. at december 31, 2022, the land's value has increased to $95700. what amount should be reported for land on pharoah's balance sheet at december 31, 2022?
$92500
corporation
a business organized as a separate legal entity under state corporation law, having ownership divided into transferable shares of stock
proprietorship
a business owned by one person
credit balance
an account balance if the total of the credit amounts exceeds the total of the debit amounts
debit balance
an account balance if the total of the debit amounts exceeds the total of the credit amounts
normal balance
an account balance on the side where an increase in the account is recorded
fair value principle
an accounting principle that states that assets and liabilities should be reported at fair value- the price received to sell and asset or settle a liability
historical cost principle
an accounting principle that states that companies should recored assets at their cost
public accounting
an area of accounting in which the accountant offers professional service to the general public
forensic accounting
an area of accounting that uses accounting, auditing, and investigative skills to conduct investigations into theft and fraud
private (managerial) accounting
an area of accounting within a company that involves such activities as cost accounting, budgeting, design, and support of accounting information systems, and tax planning and preparation
taxation
an area of public accounting involving tax advice, tax planning, preparing tax returns, and representing clients before governmental agencies
economic entity assumption
an assumption that requires that the activities of the entity be kept separate and distinct from the activities of its owner and all other economic entities
the ____ reports the assets, liabilities, and owner's equity of a business enterprise at a specific date
balance sheet
identify if the items would appear on the income statement, balance sheet, and/or owner's equity statement. ending owner's capital
balance sheet and owner's equity statement
the mere recording of economic events is called ___, and is just one part of the ___ process
bookkeeping and accounting
statement of cash flows
a financial statement that summarizes information about the cash inflows (receipts) and cash outflows (payments) for a specific period of time
owner's equity statement
a financial statement that summarizes the changes in owner's equity for a specific period of time
securities and exchange commission (sec)
a governmental agency that oversees US financial markers and accounting standard-setting bodies
chart of accounts
a list of accounts and the account numbers that identify their location
bookkeeping
a part of the accounting process that involves only the recording of economic events
account
a record of increases and decreases in specific asset, liability, or owner's equity items
double-entry system
a system that records in appropriate accounts the dual effect of each transaction
amounts owned to suppliers for goods and services purchased
accounts payable
partnership
a business owned by two or more persons associated as partners
manutfacturing company
a business that converts raw materials into finished goods to sell to customers
service company
a business that performs a service for customers
retail (merchandise) company
a business that sells products to customers in the form in which they were purchased
generally accepted accounting principles (gaap)
a common set of standards used in the US that indicated how to report economic events
income statement
a financial statement that presents the revenues, expenses, and resulting net income or net loss of a company for a specific period of time
balance sheet
a financial statement that reports the assets, liabilities, and owner's equity at a specific date