Chapter 2 Accounting
Entrepreneur
A(n) ____ is an individual who transforms ideas for products or services into real-world businesses.
A business has the ability to operate indefintely
An example of an accounting assumption is ____.
going concern
Following the ____ accounting assumption, the accountant prepares reports as though the business will operate indefinitely.
loss
If a business spends more money to operate than it earns from the sale of goods or services, it is operating at a(n) ____.
willing to take risks and organize venture
In a business, it is the entrepreneur who ____.
free enterprise system
In a(n) ____, people are free to produce the goods and services they choose.
accounting system
The ____ is designed to collect, document, and report on the financial transactions affecting the business.
accounting period
The ____ is the period of time covered by an accounting report.
Profit
The amount of money earned after the costs of operating a business are paid is ____.
Sole proprietorship
The most common form of business organization is the ____.
Service, merchandising and manufacturing
The type of business that provides a product or a service, makes sales to customers, and incurs expenses is
business entity
Under the ____ accounting assumption, a business owner must keep the financial records for the business separate from personal records.
GAAP
____ are the rules accountants follow when recording and reporting accounting information.
management accounting
____ is concerned with preparing information for internal users.
financial accounting
____ is concerned with preparing reports for external users such as investors or creditors.
capital
____ is money invested in a business by its owner(s) or the money provided by banks or investors.
Financial reports
____ summarize information about the financial status of a business.
Accounting is often call the "language of business" because
it is fundamental to the communication of financial information
The most common time period covered by an accounting report is one ____.
one year
An example of an internal user of accounting information is ____.
the manager in charge of a specific product line
The assumption that requires accounting reports to be prepared for a specific period of time is
accounting period