Module 1, ACCOUNTING : AN OVERVIEW

Question 1

Accounting is the art of recording, classifying, and summarizing in a significant manner and in terms of money, transactions and events which are in part, at least, of a financial character, and interpreting the results thereof.

Answer 1

AICPA

Question 2

Accounting is the process of identifying, measuring and communicating economic information to permit informed judgements and decisions by users of information

Answer 2

(AAA)

Question 3

Accounting is a service activity. Its function is to provide quantitative information, primarily financial in nature, about economic entities, that is to be useful in making economic decisions.

Answer 3

(FRSC)

Question 4

involves those mechanical and repetitive recording and classifying procedures related to the business activities of a natural or artificial

Answer 4

Bookkeeping

Question 5

Give 3 primary responsibilities of management

Answer 5

Planning and organizing the activities of the business enterprise
Investing and financing activities
Controlling and assessing the performance of the business enterprise

Question 6

gives roles in accounting in business

Answer 6

It helps the owner/s or managers in making plans and decisions.
It reports and analyzes business transactions thru the financial statements.
It communicates financial information to all interested parties.

Question 7

exists when a person or group of persons makes an investment or contributes its resources in order to sell products or render services to others, for the ultimate purpose of making profit.

Answer 7

Business Enterprise

Question 8

• “Business Enterprise”
• the main activities of a business enterprise is to make profit

Answer 8

Profit-oriented Organizations

Question 9

established not for profit but to render services and meet the needs of the members of the community

Answer 9

Non-profit Organizations

Question 10

is the ability of a business enterprise to pay its currently maturing financial obligations.

Answer 10

Liquidity

Question 11

is the ability of a business enterprise to meet its long-term financial obligations.

Answer 11

Solvency

Question 12

a business enterprise that cannot meet its obligations as they fall due

Answer 12

insolvent.

Question 13

This type of business provides various forms of services, not tangible products, to its customers or clients.

Answer 13

Service Enterprise

Question 14

his type of business entity is in the “buy and sell” business. A trading or merchandising enterprise buys ready-to-use products then sells these products at higher prices.

Answer 14

Merchandising Enterprise

Question 15

this involves the conversion of raw materials into finished product, which will be sold at a higher price than the production cost.

Answer 15

Manufacturing Enterprise

Question 16

a business owned by one person, called entrepreneur or proprietor.

Answer 16

Single Proprietorship

Question 17

has two or more owners called partners.

Answer 17

Partnership

Question 18

is a business that has its ownership capitalization divided into hundreds or thousands of transferable shares of stock. The corporation must have at least five owners or investors called stockholders or shareholders.

Answer 18

Corporation

Question 19

lf the business has unpaid debts which it can no longer pay, the creditors can run after the owner and attach his properties to satisfy their claim.

Answer 19

Unlimited lability

Question 19

lf the business has unpaid debts which it can no longer pay, the creditors can run after the owner and attach his properties to satisfy their claim.

Answer 19

Unlimited lability

Question 20

the liability of the partner, shareholders or members is limited only up to the extent of their paid up capital.

Answer 20

Limited lability

Question 21

it is the careful study of the client’s accounting information and gathering of evidence both from within the business enterprise and from other sources

Answer 21

auditing

Question 22

the CPA may be hired by his client to perform the latter’s tax requirements such as the settlement of tax cases, tax planning, tax consulting, etc.

Answer 22

Tax Services

Question 23

the chief accounting officer of a business enterprise

Answer 23

Controller

Question 24

the branch of accounting that is primarily concerned with the preparation and presentation of general-purpose financial statements of a business enterprise

Answer 24

Financial Accounting

Question 25

provides specific information needs of the internal data-users, principally the management

Answer 25

Management Accounting

Question 26

Internal Auditors have the responsibilities of evaluating the efficiency of operations and determining whether the business’ policies are being followed in all organizational levels of operations in order to achieve the organization’s objectives.

Answer 26

Internal Auditing

Question 27

what is the difference of accounting and bookkeeping?

Answer 27

a bookkeeper’s role is to record transactions and keep you financially organized, while accountants provide consultation, analysis, and are more qualified to advise on tax matters.