Test Answers on Financial Accounting Flashcards

Adjusting Entries Entries that update account balances prior to preparing financial statements; a bookkeeping tool. Adjusting entries never affect cash account Assets Economic resources used to produce revenue which is expected to provide future benefit for the business Audit Detailed examination of some aspect of a company’s accounting records or operating procedures in order to […]

creditors persons or entities to whom a company owes money amount owed to creditors liabilities note payable liability to the bank bonds payable debt securities sold to investors that must be repaid at a particular date some years in the future common stock the total amount paid in by stockholders for the shares they purchase […]

Managerial accounting is directed towards: providing information and analysis to managers inside an organization. Activities performed by managerial accountant include: 1. Determining the cost of providing a service or making a product 2. Assist management in profit planning and formalizing the plans into budgets 3. Determine the behavior of costs and how profit will change […]

accounting information system that identifies, records, and communicates the economic events of an organization annual report report prepared by corporate management that presents financial information and an independent auditor’s report Assets Resources owned by a business Auditor’s report A report prepared by an independent outside auditor stating the auditor’s opinion as to the fairness of […]

Creditor lender, money supplier Debitor person or organization who is in debt or under financial obligation to another Accounting a system that collects and processes financial information about an organization and reports that information to decision makers financial activities borrowing/paying back money to lenders and receiving additional funds from stockholders or paying them dividends investing […]

Accounting Information and measurement system that identifies, records, and communicates relevant information about a company’s business activities. Accounting Equation Equality involving a company’s assets, liabilities, and equity; Assets = Liabilities + Equity Assets Resources that a company owns or controls that are expected to provide current and future benefits to the business. Audit Analysis and […]

Which of the following is NOT an area in which accountants usually practice? Industrial Accounting Managerial accountants usually do which of the following? establish accounting policies Identify which of the following are considered OUTSIDE users of financial accounting information banks An example of an economic entity is a business. The form of a business organization […]

In order to be useful to managers, management accounting reports should possess all of the following characteristics EXCEPT: b. be prepared in accordance with generally accepted accounting principles What is the primary criterion for the preparation of managerial accounting reports? b. Meet the manager needs Which of the following is most associated with managerial accounting? […]

Accounting A system of analyzing, recording, and summarizing the results of a business’s operating, investing, and financing activities and then reporting them to decision makers. Accounts A standardized format that organizations use to accumulate the dollar effects of transactions on each financial statement item. Balance Sheet (Statement of Financial Position) Reports the amount of assets, […]

Accounting A system for recognizing, organizing, analyzing, and reporting information about financial transactions that affcet an organization Who are the 6 key users of accounting information? 1. managers 2. stockholders 3. employees 4. creditors 5. suppliers 6. government agencies What other types of people may be using accounting information? The news media, competitors, and unions […]

Accounting is an information measurement system that… Identifies, records and communicates information about business activities by interpreting info and designing info systems to allow business to make better decisions The Accounting Equation is… Assets=Liabilities + Owner’s Equity $100 = $10 + $90 Assets Everything a company owns Accounts Receivable Assets created by selling goods/services on […]

Accounting System that collects and processes (analyzes, measures, and records) financial information about an organization and reports that information to decision makers. Accounting entity Is the organization for with financial data are to be collected. The four basic statements: 1. Balance Sheet 2. Income Statement 3. Statement of Retained Earnings 4. Statement of Cash flows […]

Accounts Payable A liability backed by the general reputation and credit standing of the debtor. Accoutning The information system that measures business activities, processes that information into reports and financial statements,and communicates the results to decision makers. Accounting Equation The most basic tool of accounting: Assets = Liabilities + Owners’ Equity. Asset An economic resource […]

Time Period Assumption Presumes that an organization’s activities can be divided into specific time periods such as a month, a three-month quarter, a six month interval, or a year Annual Financial Statements Reports covering a one-year period Interim Financial Statements Reports covering one, three, or six month of activity Fiscal year Consists of any 12 […]

ALL DEFINITIONS AND STUFF IS FROM THE TEXTBOOK This should act as a citation so I don’t get screwed for copying from the textbook Managerial Accounting Type of accounting that focuses on providing internal management with information needed to run the company efficiently and effectively. The rule that drives managerial accounting: The value or benefit […]

Business Consists of all activities necessary to provide the members of an economic system with goods and services Sole Proprietorship Businesses owned and operated by one single owner Economic Entity Requires that a single indentifyable unit of organization be accounted for in all situations Partnership A business owned by two or more individuals Corporation An […]

Planning The process of setting goals and making plans to achieve them Strategic plans Sets firm’s long term directions Budget Short term planning more operational Control Process of monitoring planning decisions and evaluate an orgs activities and employees Feedback Provided by the control function allows managers to revise their plan. Financial accounting – users/decision makers […]

What is the function and primary focus of financial accounting? Financial accounting is concerned with providing relevant financial information about various kinds of organizations to different types of external users. The primary focus of financial accounting is on the financial information provided by profit-oriented companies to their present and potential investors and creditors. What is […]

Time period assumption An assumption that accountants can divide the economic life of a business into artificial time periods Interim periods Monthly or quarterly accounting time periods typical length of accounting time periods a month, a quarter, or a year Fiscal year An accounting period that is one year in length Calendar year An accounting […]

Managerial Accounting Systems report on various segments or business units of the company When Managers evaluate the company’s performance compared to the plan, They are performing the controlling role of management Information on a company’s past performance is provided to External parties by financial accounting Managerial Accounting systems are chosen by Comparing the costs versus […]

Balance Sheet Reports the amount of assets, liabilities, and stockholders’ equity of an accounting entity at a point in time. Income Statement Reports the revenues less the expenses of the accounting period. Statement of Retained Earnings Reports the way that net income and distribution of dividends affected the financial position of the company during the […]