accounting ch.1-3 vocab&some online work

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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


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