Test Questions on Chapter 1 – Financial Accounting – Flashcards

The process of identifying, measuring, and communication economic info about an organization for the purpose of making decisions and informed decisions.

A transient document which communicates the details of specific amendments to the FASB Codification, and explains the basis for the Board’s decisions. Although ASUs update the FASB Codification, the FASB does not consider Updates as authoritative in their own right.

Accounting that recognizes revenues and expenses as they occur, even though the cash receipt from the revenue or the cash disbursement related to the expense may occur before of after the even that causes revenue or expense recognition.

A document distributed to shareholders and other interested parties that contains the financial statements, notes to the financial statements, and management’s discussion and analysis of financial and operating factors that affected the firm together with the report of the external auditor’s examination of the financial statements.

The process of examining the financial statements of an entity by an independent third party with the objective of expressing and opinion about the fairness of the presentation of the entity’s financial position, results of operations, changes in financial position, and cash flows. The practice of auditing is less precisely referred to as public accounting.

Procedures that are used to keep track of financial transactions and accumulate the results of and entity’s financial activities.

Cash receipts or disbursements of an entity.

Professional designation earned by passing a broad, two-part examination and meeting certain experience requirements. Examination topics include budgeting, performance management, cost management, financial statement analysis, corporate finance, decision analysis, and professional ethics.

A Professional designation earned by fulfilling certain education and experience requirements, in addition to passing a comprehensive, four-part examination. Examination topics include financial accounting theory and practice, income tax accounting, managerial accounting, governmental and not-for-profit accounting, auditing, business law, and other aspects of the business environment.

The job title of the person who is the chief accounting officer of an organization. The controller is usually responsible for both the financial and managerial accounting functions. Sometimes referred to as comptroller.

A subset of managerial accounting that relates to the determination and accumulation of product, process, or service cost.

A group authorized by the U.S. Congress to establish cost accounting standards for government contractors.

An organization or individual who lends to the entity. Examples include suppliers who ship merchandise to the entity prior to receiving payment for their goods and banks that lend cash to the entity.

An organization, individual, or a group of organizations or individuals for which accounting services are performed.

An advanced user-accessible computer application that systemized and reorganized many divergent elements of the U.S. GAAP into one composite structure permitting users to review, study, and research topics. The codification presents U.S. GAAP in a uniform and logical order, with approximately 90 major accounting topics. Since July 2009, The FASB codification has represented a single source of all U.S. GAAP.

Accounting that focuses on reporting an entity’s financial position at a point in time and/or its results of operations and cash flows for a period of time.

An organization composed of people from the public accounting profession, business, and the public that is responsible for the funding of and appointing members to the Financial Accounting Standards Board and the Governmental Accounting Standards Board.

The body responsible for establishing U.S. generally accepted accounting principles.

Pronouncements of the Financial Accounting Standards Board (FASB) and its predecessors that constitute appropriate accounting for various transactions used for reporting financial position and results of operations to investors and creditors. Since July, 2009, the FASB Codification has represented a single source of U.S. GAAP.

Standards for auditing that are established by the Auditing Standards Board of the American Institution of Certified Public Accountants unless superseded or amended by the PCAOB.

Established by the Financial Accounting Foundation to develop guidelines for financial accounting and reporting it by state and local governmental units.

The personal characteristic of an accountant, especially and auditor, that refers to both appearing and in fact being objective and impartial.

The report accompanying audited financial statements that explains briefly the auditor’s responsibility and the extent of work performed. The report includes an opinion about whether the information contained in the financial statements is presented fairly in accordance with generally accepted accounting principles.

The personal characteristics of honesty, including being forthright in dealings and communications with others.

The practice of auditing within a company by employees of the company.

Standard-setting body responsible for the development of International Financial Reporting Standards (IFRS), permitted or required by more that 100 countries.

Pronouncements of the International Accounting Standards Board that are considered to be a “principles-based” set of standards in that they establish broad rules as well as dictating specific treatments. Many of the standards of forming part of IFRS are known by the older name of International Accounting Standards.

An organization or individual who has an ownership interest in the firm. For corporations, referred to as stockholder or shareholder.

Accounting that is concerned with the internal use of economic and financial information to plan and control many of the activities of an entity and to support the management decision-making process.

The personal characteristic of impartiality, including freedom from conflict of interest.

The segment of the accounting profession that proves auditing, income tax accounting, and management consulting services to clients.

Established in 2002 with authority to set and enforce auditing and ethics standards for public companies and their auditing firms; affiliated with SEC.

A unit of the federal government that is responsible for establishing regulations and ensuring full disclosure to investors about companies and their securities that are traded in interstate commerce.

Pronouncements of the Financial Accounting Standards Board that formerly constituted generally accepted accounting principles. Effective July 2009, the SFAS series was superseded by the FASB Accounting Standards Codification.