ACNT 1303 Chapter 1

Describe the process used by FASB to develop GAAP

1. The issue is placed on the Boards agenda. 2. After researching the issue, a Preliminary Views document is issued, 3. Public hearings are held. 4. An Exposure Draft is issued. 5. The Board issues an Accounting Standards Update which amends the FASB Accounting Standards Codification.

Merchandising Business

A business that 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 account who has passed the exam offered by the Association of Certified Fraud Examiners.

Para-accountant

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

Certified Public Accountant

A public accountant who has met certain education all and experience requirements and has passed an examination prepared by the American Institute of Certified Public Accountants.

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 (FASB). These 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.

Corporation

A type of ownership structure i 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.

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.

Accounting Information Systems

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

Certified Management Accountant

An accountant who has passed an examination offered by the Institute of Management Accountants.

Sarbanes-Oxley Act (SOX)

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

Certified Internal Auditor (CIA)

An iternal auditor who has achieved professional recognition by 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.

Financial Accounting Standards Board Accounting Standards Codification

Codification is an electronic database that provides one authoritative source for the standards which must be followed by U.S. companies.

Interpreting

Deciding the meaning and importance of the infomation in various reports.

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.

Recording

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

Public Hearing

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

Define GAAP

Generally accepting accounting principles (GAAP)

Bookkeeper

Generally supervises the work of accounting clerks, helps with daily accounting work, and summarizes accounting information.

Financial Accounting

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

Analyzing

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

Generally accepted 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.

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 the operating and accounting control procedures adopted by management to make sure the controls are adequate and being followed, assuring that accurate and timely information is provided.

Taxation

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

Tax Accounting

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

Define three types of business ownership structures.

Sole proprietorship, the partnership and the corporation.

Classifying

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

Reporting

Telling the results of the financial information

Controller

The accountant who oversees the entire accounting process and is the principal accounting officer of a company.

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 an individual or organization.

Describe the accounting process

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

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.

Accountant

designs the accounting information system and focuses on analyzing and interpreting information.