Ch 1 - Acct, Lang of Business GEN 1 Flashcards Preview

Principles of Accounting > Ch 1 - Acct, Lang of Business GEN 1 > Flashcards

Flashcards in Ch 1 - Acct, Lang of Business GEN 1 Deck (19):
1

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

2

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

3

What are the three main areas of practice for accountants?

1. public accounting
2. managerial accounting
3. governmental accounting

4

What are the three main services of a public accounting firm?

1. auditing
2. tax accounting
3. mgmt advisory services

5

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

6

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

7

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

8

What are the four agencies employing large number of accountants?

1. SEC
2. IRS
3. FBI
4. Homeland Sec

9

Who are the three categories of users of financial info inside the company?

1. owners
2. managers
3. employees

10

Who are the seven categories of users of financial info outside the company?

1. tax authorities
2. suppliers
3. regulatory agencies
4. unions
5. banks
6. customers
7. investors/potential investors

11

What are the three main types of business entities? (5)

1. sole proprietorship
2. corporation (S Corp)
3. partnership (and LLP)

12

when does a sole proprietorship end?

When owner is no longer willing or able to keep the business going

13

Is the owner legally responsible for any debts or taxes of the business?

Yes

14

Which is the only form of business that is legally considered a separate legal entity from it's owner(s)?

corporation

15

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

16

What happens in a partnership when a partner leaves?

the partnership is dissolved and new one is drawn up with remaining partners

17

Who is responsible for unpaid debts or taxes in a partnership?

any of the partners personal finances

18

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

19

What is an advantage to an S Corp?

owners have limited liability and avoid double taxation.