Accounting Chpt. 1-3

Identify career opportunities in accounting.

Career opportunities in accounting include work in public accounting, private accounting, and governmental and not-for-profit accounting.

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.

Define GAAP and describe the process used by FASB to develop these principles.

Generally accepted accounting principles (GAAP) are the rules that businesses must follow when preparing financial statements. FASB takes the following steps to develop an accounting standard: 1. The issue is placed on the Board's 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.

Describe the purpose of accounting.

The purpose of accounting is to provide financial information about a business to individuals and organizations.

Describe the accounting process.

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

Define three types of business ownership structures.

Three types of business ownership structures are the sole proprietorship, the partnership, and the corporation.

Examples of revenue accounts include all of the following EXCEPT

Wages.

A T account has which of the following three major parts?

a title, a debit side, and a credit side

Liability, owner's capital, and revenue accounts normally have

credit balances.

Asset and expense accounts normally have

debit balances.

Tyler paid $3,700 on account to the company from which equipment was purchased on credit. This transaction would

decrease assets and decrease liabilities.

The fact that each transaction has a dual effect on the accounting elements provides the basis for what is called

double-entry accounting.

Payment of a telephone bill represents an increase in a(n)

expense.

Accounts that affect owner's equity are

expenses, capital, and revenue.

Any accounting period of twelve months' duration is usually referred to as a(n)

fiscal year.

Stephen purchased office supplies for $800 on account. This transaction would

increase assets and increase liabilities.

Meghan started her business by investing $30,000 in cash. This transaction would

increase assets and increase owner's equity.

Jason purchased office equipment for $4,800 in cash. This transaction would

increase one asset and decrease another asset.

A purchase of an asset on account

increases assets.

The accounting equation may be expressed as

owner's equity = assets - liabilities.

Identifying accounts and classifying accounts is part of which phase in the accounting process?

processing

Increases to owner's equity may be from

revenue that is derived from sales of goods or services.

The trial balance

shows the current date.

An example of an expense is

supplies consumed.

The standard T account includes all of the following EXCEPT

the current date.

A decrease in owner's equity may result from a(n)

withdrawal of cash from the business by the owner.