Accounting

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.

what are the 3 types of ownerships

sole proprietorship partnership corporation

describe the 3rd step in the accounting process

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

describe a corporation

stock holders limited risk little influence on business decisions

describe the 5th step in the accounting process

telling the results. In accounting, it is common to use tables of numbers to report results.

what is FASB?

the Financial Accounting Standards Board (FASB) creates the GAAP's

describe the 4th step in the accounting process

the aggregation of many similar events to provide information that is easy to understand.

What is the purpose of the SEC

to help develop standards for reporting financial information to stockholders

describe the purpose of accounting

to provide financial information about the current operations and financial condition of a business to individuals, agencies, and organizations

describe a partnership

two or more partners partners share all risk may disagree on decisions

Certified Public Accountant (CPA)

A public accountant who has met certain educational 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. 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.

What accounting information do owners need to know and why?

Company's profitability and current financial condition. good? may consider future investments bad? they need to figure out why

What accounting information do gov't agencies need to know and why?

Company's profitability, cash flows, and overall financial condition. The IRS enforces U.S. tax laws to determine how much income tax the business must pay. Local governments may be willing to adjust property taxes paid by the business to encourage it to stay in town.

What accounting information do creditors need to know and why?

Company's profitability, debt outstanding, and assets that could be used to secure debt. to determine if a loan should be given and if so what amount of debt can the business support and what interest rate should be charged

"big four"

Deloitte, Ernst & Young, KPMG, and PricewaterhouseCoopers.

Accountant

Designs the accounting information system and focuses on analyzing and interpreting information. also look for important trends in the data and study the impact of alternative decisions.

What accounting information do managers need to know and why?

Detailed measures of business performance. to make operating decisions

Cost Accounting.

Determining the cost of producing specific products or providing services and analyzing for cost effectiveness.

Public hearings

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

What is the 4th step in developing GAAP's

Following these hearings, the Board issues an Exposure Draft. This document explains the rules that FASB believes firms should follow in accounting for this event.

Bookkeepers

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

Sarbanes-Oxley Act (SOX)

In 2002, the Sarbanes-Oxley Act (SOX) was passed by Congress to help improve reporting practices of public companies.

Financial Accounting.

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

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.

What does SEC stand for

Securities and exchange commission

Tax Accounting.

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

Taxation

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

IASB

The International Accounting Standards Board (IASB) issues accounting standards followed by many firms in countries outside the United States.

IFRS

The International Accounting Standards Board (IASB) issues accounting standards followed by many firms in countries outside the United States. These are called International Financial Reporting Standards (IFRS)

Financial accounting standards board accounting standards codification

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

What is the 3rd step in developing GAAP's

To gather additional views on the issue, the Board will often hold public hearings around the country. Interested parties are invited to express their opinions at these hearings.

What are the 6 steps in the accounting process?

analyzing, recording, classifying, summarizing, reporting, and interpreting

describe the 6th step in the accounting process

deciding the meaning and importance of the information in various reports. This may include ratio analysis to help explain how pieces of information relate to one another.

describe the 2nd step in the accounting process

entering financial information about events into the accounting system.

What is GAAP?

generally accepted accounting principles Procedures and guidelines developed by the Financial Accounting Standards Board to be followed in the accounting and reporting process.

how many steps are involved in the process followed by the FASB to develop GAAP's

5

How many steps are in the accounting process?

6

Certified Fraud Examiner (CFE)

A forensic accountant who has passed the exam offered by the Association of Certified Fraud Examiners.

Para-accountants

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

Accounting Information Systems.

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

Private Accounting

Accounting Information Systems Financial Accounting Cost Accounting Budgeting Tax Accounting Internal Auditing

What is the 5th step in developing GAAP's

After considering feedback on the Exposure Draft, the Board issues a final Accounting Standards Update which amends the Financial Accounting Standards Board Accounting Standards Codification. This Codification is an electronic database that provides one authoritative source for the standards that must be followed by U.S. companies.

What is the 2nd step in developing GAAP's

After researching an issue, FASB issues a Preliminary Views document. This document identifies the pros and cons of various accounting treatments for an event and invites others to comment.

Public Accounting

Auditing Taxation Management Advisory Services

Management Advisory Services.

Providing advice to businesses on a wide variety of managerial issues.

Accounting clerk

Records, sorts, and files accounting information. will specialize in cash, payroll, accounts receivable, accounts payable, inventory, or purchases.

Auditing

Reviewing and testing to be certain that proper accounting policies and practices have been followed. to provide an independent opinion that the financial information about a business is fairly presented in a manner consistent with generally accepted accounting principles.

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.

What is the first step in developing GAAP's

The issue is placed on FASB's agenda. This lets everyone know that the Board plans to develop a standard addressing this issue.

Budgeting.

The process in which accountants help managers develop a financial plan.

Describe the first step of the accounting process

looking at events that have taken place and thinking about how they affect the business. usually occurs when the business receives some type of information, such as a bill, that needs to be properly entered into the business's records. also involves deciding if the piece of information should result in an accounting entry or not.

3 types of businesses

merchandising, manufacturing, service

Describe a sole proprietorship

one owner owner assumes all risk owner makes all decisions

Who are the four main people who need to know accounting information?

owners, managers, creditors, and government agencies