Chapter 1: Accounting: The Language of Business

An accounting system is designed to do which of the following activities:

-Classify the data in a meaningful way -Accumulate data about a firm's financial activities -Summarize information in financial statements

Accountants have important roles in accounting systems. The responsibilities of an an accountant include:

-Establishing the records and procedures that make up an accounting system -Supervise the operation of the system -Interprets the resulting financial information.

Many accounting firms offer management advisory services. These services help clients by offering which of the following activities:

-helping clients improve their information systems or their business performance establishing accounting policies, managing the accounting system, preparing financial statements, interpreting financial information, providing financial advice to management, preparing tax forms, performing tax planning services, preparing internal reports for management.

In 2009, the FASB created a new update, called the ___. This system converted GAAP pronouncements into approximately 90 accounting topics that provide guidance to accounting professionals.

Accounting Standards Codification

Corporation

An entity separate from its owners; the entity has an indefinite life.

The review of financial statements to assess their fairness and adherence to generally accept accounting principles is known as

Auditing

Partnership

Entity owned by two or more people. The life of he business ends when one of the owners leaves.

Keeping financial records and preparing financial resorts as part of the staff of federal, state, or local government units is known as --- accounting.

Governmental accounting

___ accounting is the study of accounting principles used by different counties.

International

Management

Involves helping clients improve their information systems or their business performance.

tax accounting

Involves tax compliance and tax planning.

Auditing

Involves the review of financial statements to assess the fairness and adherence to generally accept financial statement.

Under some states, a special type of partnership can be formed that provides limited liability for all partners. Under this partnership, partners have liability for their own actions and the actions of those under their controls. This type of partnership is called a:

Limited liability partnership

Some of the activities by managerial accountants includes:

Preparing: tax forms, internal reports, financial statements.

The Sarbanes-Oxley Act includes which of the following provisions.

Prohibits the destruction or creation of documents to impede a federal investigation.

Accounting Clerk

Responsible for record keeping for part of the accounting system.

Book-keeper

Responsible for recording business transactions.

Accountant

Supervise other accounting positions and prepare financial statements.

The Securities and Exchange Commission (SEC) oversees the financial information provided by publicly owned corporations.

The SEC can suspend trading of a company's shares on the stock exchange The SEC has the final say on financial accounting issues faced by publicly traded companies.

The results of the accounting process is communicated to the users of accounting information

True

The process by which financial information about a business is recorded, classified, summarized, interpreted, and communicated to interested parties is known as (accounting/bookkeeping/auditing)

accounting

A report that contains the auditor's opinion about the fair presentation of the operating results and financial position of a company is called a(n) ___ report.

auditor's

Joan Simons opened a car wash. She elected a business entity that keeps the company legally separate from its owners, and has a legal right to own and do business in its own name. The type of business entity that Joan elected is known as a:

corporation

The people, companies or governmental agencies to whom a business owes money are called

creditors

soleproprietorship

entity owned by one person. The life of the business ends when the owner no longer keeps the business going.

Managerial Accounting jobs include

establishing accounting policies, managing the accounting system, preparing financial statements, interpreting financial information, providing financial advice to management, preparing tax forms, performing tax planning services, preparing internal reports for management.

Rules that must be followed by publicly owned companies that are developed by the Financial Accounting Standard Board, are called

generally accepted accounting principles

To become a Certified Public Accountant (CPA), an individual must meet the following requirements.

have a certain number of college credits in accounting courses demonstrate good personal character, pass the Uniform CPA Examination, and fulfill the experience requirements of the state of practice.

Sometimes referred to as private accounting, ______ accounting involves working for a single business or entity.

managerial accounting

Maria Lopez owns a sole proprietorship. Based on the ___ assumption, she does not use her business checking account to pay her own personal bills.

separate entity

A business entity owned by one person, and whose debts are the legal responsibility of the owner, is called a:

sole proprietorship

A business entity owned by one person, who is legally responsible for the debts and taxes of the business is called a --- ---

sole proprietorship

A ____ is an owner of a corporations.

stockholder

Corporation issue certificates that represent the ownership of a corporation. These certificates are called:

stocks

Because accounting is used to communicate financial information, it is often called....

the language of business.