Accounting Final

The _______________ designation is a highly regarded designation, and a common goal for many accountants. In order to become a _______________, certain requirements must be met, which include a bachelor's degree, passing a four-part exam, minimum experience requirements, and upholding very high ethical

CPA

In addition to a bachelor's degree, there are multiple certifications accountants can earn that open doors to new job and career opportunities, and higher compensation levels. Some of those certifications include:

CPA, CIA, and CMA

What is an example of an asset?

Cash

The ________________ means revenues and expenses are recognized and recorded when cash actually changes hands.

Cash accounting method

What are the three sections in the Cash Flow Statement?

Cash form operating activities, investing activities and financning activities

The Sarbanes Oxley Act (SOX) significantly changed the rules around how public companies report financial information. Company management must personally _______________ the accuracy of financial statements.

Certify

A list of all account titles and account numbers used in a ledger is called the ____________.

Chart of accounts

Account numbers convey an account's _______ in the ledger.

Classification and position

Accountants should prepare financial information that is delivered in a consistent format over time, so that when users analyze this information, it can easily be ________________ to prior periods of time.

Compared

Every purchase should be recorded based on its actual acquisition cost (or price). Which of the following accounting principles is applied?

Cost principle

The individual or business that allows a customer to purchase goods or services on account is also considered a:

Creditor

In any business, the __________ of a company always have the first financial claim on the assets of a company.

Creditors

With accrual basis accounting, what is a previously recorded prepayment of an expense or receipt of cash that must be divided over two or more accounting periods called?

Deferral

What are the two types of adjusting entries known as?

Deferrals and accruals

Public accounting firms provide various tax and consulting services. The largest firms that provide public accounting services in the US are called the "Big Four", which include:

Deloitte, KPMG, Ernst Young, pricewaterhouseCoopers

In a trial balance, the total debit balance must ______ the total credit balance.

Equal

The financial claims on a company's assets are called ___________, and are organized into two types of claims: liabilities and owner's equity.

Equities

Net income is included in the _________ section of the balance sheet.

Equity

How are revenues and expenses reflected on the Balance Sheet?

Equity section

________________ in accounting is necessary in order for investors and consumers to trust, and have confidence in, financial information that companies report.

Ethics

To begin preparing financial statements from the adjusted trial balance, what step is taken?

Extending the Balance Sheet & Income Statement amounts

A/an ________________ of accounting information is someone outside of a company that has limited access to accounting information.

External user

_________________ focuses on the management of the assets, liabilities, and cash flow of an organization, financial analysis like ROI and ROE, and financial planning of future growth.

Finance

The ________________ is an independent, non-profit organization that establishes financial reporting standards through GAAP.

Financial accounting standards board

________________ is the system of accounting used by governments and non-profit organizations to group resources into specific funds so they know what resources are available to complete a specific purpose or task. This type of accounting is more focused on accountability versus profitability.

Fund accounting

Each account in the chart of accounts is organized into ________.

General ledger divisions

The ________________ are a commonly-followed set of accounting rules, standards, and procedures for reporting financial information to external users.

Generally accepted accounting principles

Which accounting assumption assumes any company will remain in operation for the foreseeable future?

Going concern assumption

________________ relies on tax revenue from companies and its citizens to fund government operations.

Government

_______________ managers use accounting information to determine hiring needs, compensation adjustments, benefits packages, and measuring employee performance.

HR

What is the first step in the Accounting Cycle?

Identify and analyze transactions

Your manager asks you to look up last month's total Service Revenue. In which primary financial statement can you find this information?

Income statement

Your manager asks you to look up last year's Net Loss. In which primary financial statement can you find this information?

Income statement

An account's normal balance is always...

Increased

An ________________ of accounting information is someone within a company that uses financial information to inform company decision making.

Internal user

If financial information isn't delivered in a consistent format over time, ________________ would have a more difficult time understanding if a company's revenues and profits are growing, and by how much.

Investors

_______________ want to know, is the company a good investment? If so, at what price per share? How is the company performing relative to its projections, its competitors, and the broader market?

Investors

Without being able to understand the financial health of a company, ________________ and ________________ would not be able to make informed decisions about investing their money in a company.

Investors, creditors

Which of the following source documents would be best used to support the sale or purchase of goods and/or services on account?

Invoice

What is the importance of a posting reference, when posting journal entries to a ledger?

It identifies the connection between the journal and ledger.

Which of the following is true about an accounting worksheet?

It is a helpful tool that aids accountants in the accounting cycle.

Why is a trial balance a necessary step in the accounting cycle?

It provides an easy way to analyze the account balance of every account in the general ledger.

Companies record transactions in a:

Journal

Where are transactions first recorded in the accounting cycle?

Journal

A collection of all account transactions and balances in an accounting system, organized by account, is called a(n) _________.

Ledger

A(n) __________ is a debt or obligation owed to any other person or organization, oftentimes referred to as a creditor.

Liability

What are the steps to manually prepare an unadjusted trial balance?

List Accounts, Record Account Balances, Balance Check

A(n) ____________ is when money is given to an individual or business in exchange for future repayment of the principal amount plus interest.

Loan

The following is an example of a liability:

Loan

Which of the following is not included in a journal entry?

Location

_______________ is the function of accounting that helps an organization make well-informed decisions through the measurement, analysis, and communication of accounting information.

Managerial accounting

_______________ and _______________ accountants ensure that accounting and financial information is prepared in a timely, accurate, well-organized and complete manner.

Managerial, financial

An example of an internal user of accounting information is:

Marketing manager

When using the accrual basis of accounting, expenses incurred to provide a product or service should be recorded (or matched) at the same time the related revenue for the sale of that product or service is recorded. Which of the following accounting principles is applied?

Matching principle

Which of the following source documents would be used as support only when there is no other form of documentation available?

Memorandum

The profit that remains after all expenses have been subtracted from revenue during a certain time period is called _______.

Net income

Owners' Equity is a(n):

Owners claim on company assets after all liabilities have been paid

An asset is what a company:

Owns

Although the Sarbanes Oxley Act (SOX) has increased the cost of public financial reporting, the act has had a _______________ impact as it increased the practice, accountability, and oversight around ethical financial reporting standards.

Positive

After transactions are recorded in a journal, they are then _______ to the general ledger.

Posted

What is the third step in the Accounting Cycle?

Posting to the general ledger

________________, also referred to as internal accounting, refers to a role inside a company that helps record transactions and prepare/analyze financial statements and reports, in order to inform company decision-making.

Private accounting

An Income Statement is also commonly known as a...

Profit and loss statement

The process of ensuring the bank account balance(s) of an organization agrees with its cash accounting records is called _______ cash.

Proving

________________, also referred to as external accounting, refers to a business that works with their clients to help prepare reports and review (audit) financial information for accuracy and completeness before it is shared publicly.

Public accounting

Investment analysts and _________________ rely heavily on proper financial information, so that they can help the everyday investor determine the risks associated with investing in a company's stock or bonds

Rating agencies

What is the 2nd step of the accountign equation

Record transactions

Which of the following is one of the four primary accounts that affects owners' equity?

Revenue

When using the accrual basis of accounting, revenues must be recognized (recorded) in the period when they are earned. If accounting on a cash basis, revenues are to be recognized when cash is received. Which of the following accounting principles is applied?

Revenue recognition principle

The ________________ helped restore confidence in the financial markets by cracking down on accounting errors and protecting investors from fraudulent accounting and financial reporting practices.

Sarbanes oxley act

What type of company provides services for a fee?

Service business

If a person is ultimately responsible for paying all expenses, debts, and taxes for a business, the business is organized as a:

Sole proprietorship

Your manager asks you to look up last month's total cash from investing activities. In which primary financial statement can you find this information?

Statement of cash flows

Under the accrual accounting method, if a business and its customer agree to $12,000 in services to be performed over a 4 month period, how would the business record the revenue?

The business would record 3,000 in revenue for every month the service is performed

What information would you need to create a new general ledger account for Landscaping Expenses?

The chart of accounts, a title for the new account, and a unique account number for the new account

Where would be the most efficient place to go to analyze supply expenses for a particular period?

The ledger account for supply expenses

What is the difference between the ledger and the chart of accounts?

The ledger organizes transactions and balances by account, while the chart of accounts organizes accounts by number

Which accounting assumption assumes companies consistently maintain and report financial information using the same period of time, usually monthly, quarterly, and/or annually?

Time period assumption

In order for financial data and information to be useful, it needs to be reported in a ________________ and accurate manner.

Timely

No matter the mix of liabilities and owner's equity, the sum of liabilities and owner's equity will ALWAYS be equal to the _________________ a company owns.

Total assets

What is market capitalization?

Total number of outstanding shares multiplied by the current stock price

In addition to raising money by selling stock (equity) on a stock exchange, some companies can also raise capital in the form of debt, by issuing _______________ from various debt markets worldwide.

bonds

From an accounting/finance perspective, Business Managers would find it difficult to price their products and/or services without fully understanding the product's __________________.

cost of goods sold

What does the Income Statement communicate to stakeholders?

financial performance

Net income is calculated using the ___________ portion of the worksheet.

income statement

Accounting is the ________________ of business.

language

A sole proprietorship is a business owed by one person, and the owner has _____________ liability.

unlimited

A company has 100,000 shares outstanding with a current market price of $15 per share. What is the market capitalization

1,500,000

How many steps are in the Accounting Cycle?

8

What is needed to convert a company's accounting records from cash to accrual basis accounting?

A series of journal entries.

________________ is the process of recording, maintaining, and reporting an organization's financial transactions and records.

Accounting

The _________________ is often referred to as the balance sheet equation since it highlights the structure of the balance sheet.

Accounting equation

_______________ is one of the six primary business functions.

Accounting/Finance

An expense incurred or revenue earned that has not yet been recorded in the accounting records but must be included in the current period's financial statements is known as a(n) ___________.

Accrual

The ________________ means revenues and expenses are recognized and recorded at the time they are earned or incurred, even if money doesn't change hands.

Accrual accounting method

What is the primary difference between the two types of adjusting entries?

Accruals are made for payments after an expense/revenue occurrence. Deferrals are made for payments that occurred before an expense/revenue occurrence.

A series of journal entries used to convert a company's accounting records from a cash to accrual basis are called _________.

Adjusting entries

______________ is the sixth step in the account cycle.

Adjusting entries

What is a general ledger account?

An account that is included in company financial statements

What is a ledger?

An account-specific extension of the journal

Which of the following is not one of the four primary accounts that affect owners' equity?

Assets

What order are accounts listed when preparing a trial balance?

Assets, Liabilities, Owners' Equity, Revenue, Expenses

Which equation below is the accounting equation?

Assets= Liabilities+ Owners equity

In the accrual method of accounting, revenues and expenses are recognized and recorded _______________.

At the time they are earned or incurred.

In what order are accounts presented on the trial balance?

Balance Sheet accounts followed by Income Statement accounts

A ___________ is a financial statement that marks a company's financial situation at a moments in time, showing all assets, liabilities and owner's equity.

Balance sheet

What are the three primary and most commonly used financial statements?

Balance sheet, income statament and cash flow statement

Which of the following source documents is used to support the cash balance reported on a company's balance sheet?

Bank statement

Under the cash accounting method, if a business received $10,000 upfront for services to be performed over a 4 month period, how would the business record the revenue?

Business would record 10,000 in revenue as soon as the payment is recieved

More than half of all accountants in the US fall under the private accounting umbrella. Examples of private accounting jobs include a:

CFO

A(n) __________ is a list of all general ledger account balances at the end of an accounting period, before any adjusting entries are made.

Unadjusted trial balance

What does the Cash Flow Statement communicate to stakeholders?

a companys sources and use of cash