Flashcards in Ch 1 - Acct, Lang of Business GEN 1 Deck (19):
What three things is an accounting system designed to do?
1. accumulate data about a firm's financial affairs
2. classify the data in a meaningful way
3. summarize it in financial statements
What are the three main responsibilities of an accountant?
1. establishes records and procedures that make up an accounting system
2. supervises ops of system
3. interprets resulting financial info
What are the three main areas of practice for accountants?
1. public accounting
2. managerial accounting
3. governmental accounting
What are the three main services of a public accounting firm?
2. tax accounting
3. mgmt advisory services
What are the five requirements of becoming a CPA?
1. certain number of college credits in accounting courses
2. demonstrate good personal character
3. pass Uniform CPA Examination
4. fulfill experience requirements of state of practice
5. follow professional code of ethics
What is the difference between tax compliance and tax planning? (2)
1. compliance: deals with prep of tax returns and audit of those returns
2. planning: involves giving advice on how to reduce tax liability
What are eight main activities of managerial accounting?
1. establishing accounting practices
2. managing accounting systems
3. preparing financial statements
4. interpreting financial info
5. providing financial advice to mgmt
6. preparing tax forms
7. performing tax planning services
8. preparing internal reports for mgmt
What are the four agencies employing large number of accountants?
4. Homeland Sec
Who are the three categories of users of financial info inside the company?
Who are the seven categories of users of financial info outside the company?
1. tax authorities
3. regulatory agencies
7. investors/potential investors
What are the three main types of business entities? (5)
1. sole proprietorship
2. corporation (S Corp)
3. partnership (and LLP)
when does a sole proprietorship end?
When owner is no longer willing or able to keep the business going
Is the owner legally responsible for any debts or taxes of the business?
Which is the only form of business that is legally considered a separate legal entity from it's owner(s)?
What are the six areas that should be addressed in a partnership agreement?
1. amount each partner will contribute to the business
2. each partner's percentage of ownership
3. each partner's share of the profits
4. duties each partner will perform
5. responsibility each partner has for amounts owed to creditors and tax authorities
6. how to divide up ownership and profits
What happens in a partnership when a partner leaves?
the partnership is dissolved and new one is drawn up with remaining partners
Who is responsible for unpaid debts or taxes in a partnership?
any of the partners personal finances
What liability is the limited liability partnership?
each partner is responsible for their own actions and those they supervise, but they are not responsible for another partner's malfeasance