Chapter 1- Accounting In Action

Question 1

An area of public accounting ranging from development of accounting and computer systems to support services for marketing project and merger and acquisition activities

Answer 1

Management consulting

Question 2

The amount by which revenues exceed expenses

Answer 2

Net income

Question 3

International accounting standards set by the International Accounting Standards Board (IASB)

Answer 3

International Financial Reporting Standards (IFRS)

Question 4

The increases in assets or decreases in liabilities resulting from the sale of goods or the performance of services in the normal course of business

Answer 4

Revenues

Question 5

A business owned by two or more persons associated as partners

Answer 5

Partnership

Question 6

In accounting standard-setting body that issue standards adopted by many countries outside of the United States

Answer 6

International Accounting Standards Board (IASB)

Question 7

Something of value owned by an entity; economic resources that are owned by the business and used in the business hopefully to produce a profit.

Answer 7

Assets

Question 8

Law passed by Congress intended to reduce unethical corporate behavior

Answer 8

Sarbanes-Oxley Act (SOX)

Question 9

The amount by which expenses exceed revenues

Answer 9

Net loss

Question 10

An area of accounting in which the counter offers expert service to the general public

Answer 10

Public accounting

Question 11

Assets = liabilities + common stock + revenues - expenses - dividends

Answer 11

Expanded accounting equation

Question 12

An assumption that requires that the activities of the entity be kept separate and distinct from the activities of its owner and all other economic entities

Answer 12

Economic entity assumption

Question 13

Financial information that is capable of making a difference in a decision

Answer 13

Relevance

Question 14

The information system that identifies, records, and communicates the economic event of an organization to interested users

Answer 14

Accounting

Question 15

A part of accounting that involves only the recording of economic events

Answer 15

Bookkeeping

Question 16

The economic events have a business that are recorded by accountants

Answer 16

Transactions

Question 17

In accounting principles that states that companies should record assets at their cost

Answer 17

Historical cost principle

Question 18

The use of software and statistics to draw inferences from data

Answer 18

Data analytics

Question 19

A financial statement that summarizes the changes in retained earnings for a specific period of time

Answer 19

Retained earnings statement

Question 20

Common standards that indicate how to report economic events

Answer 20

Generally excepted accounting principles (GAAP)

Question 21

An accounting principle stating that assets and liabilities should be reported at fair value (The price received to sell an asset or settle a liability)

Answer 21

Fair value principle

Question 22

The ownership claim on the corporations total assets

Common stock and retained earnings

Answer 22

Stockholders equity

Question 23

A business organized as a separate legal entity understate corporation law, having ownership divided into transferable shares of stock

Answer 23

Corporation

Question 24

An area of accounting that uses accounting, auditing, and investigative skills to conduct investigations into theft and fraud

Answer 24

Forensic accounting

Question 25

A business owned by one person

Answer 25

Proprietorship

Question 26

An area of accounting within a company that involve such activities as cost accounting, budgeting, design and support of accounting information systems, and tax planning and preparation

Answer 26

Private (managerial) accounting

Question 27

A financial statement that summarizes information about the cash inflows (receipts) and cash (outflow’s) payment for a specific period of time

Answer 27

Statement of cash flows

Question 28

Examination of financial statement by certified public accountant in order to express an opinion as to how accurately the financial statements present the companies results and financial position

Answer 28

Auditing

Question 29

The cost of assets consumed or services used in the process of generating revenue

Answer 29

Expenses

Question 30

A financial statement that reports the assets, liabilities, and stockholders equity at a specific date. Proves the accounting equation is still in balance.

Answer 30

Balance sheet

Question 31

The system of collecting in processing transaction data and communicating financial information to decision-makers

Answer 31

Accounting information system

Question 32

Assets = liabilities + stockholders equity

Answer 32

Basic accounting equation

Question 33

In the area of public accounting involving tax advice, tax planning, preparing tax returns, and representing client before governmental agencies

Answer 33

Taxation

Question 34

A financial statement that Presents the revenues and expenses and resulting net income or net loss of a company for a specific period of time. Revenues-expenses= net income (net loss)

Answer 34

Income statement

Question 35

An assumption stating that only transactionsthat can be expressed in terms of money are recorded.

Answer 35

Monetary unit assumption

Question 36

Debts and obligations of the company. (What the company owes)

Answer 36

Liabilities

Question 37

A private organization that establishes generally excepted accounting principles (GAAP) in the United States

Answer 37

Financial Accounting Standards Board (FASB)

Question 38

The field of accounting that provides economic and financial information for investors, creditors, and other external users

Answer 38

Financial accounting

Question 39

Numbers and descriptions match foot really existed or happened-they are factual

Answer 39

Faithful representation

Question 40

The field of accounting that provides internal reports to help users make decisions about their companies

Answer 40

Managerial accounting

Question 41

A governmental agency that overseas US financial markets and accounting standard-setting bodies

Answer 41

Securities and Exchange Commission (SEC)

Question 42

All items (assets) should be recorded and reported at their cost. Assets are not adjusted to their market value in future years.

Answer 42

Cost principle

Question 43

What is owned (assets) must equal what is owed to creditors (liabilities) and to owners (stockholders’ equity); applies to all economic entities.

Answer 43

Accounting concept

Question 44

An accountants way of communicating the financial information of a company to the interested users.

Answer 44

Financial statements

Question 45

Revenues-expenses=net income (net loss)

Answer 45

Income statement

Question 46

Summarizes the changes in retained earnings over a specific period of time. Beginning retained earnings + net income (or - net loss) - dividends = ending retained earnings

Answer 46

Retained earnings statement

Question 47

Reports the assets, liabilities and stockholders equity of a company at a specific date. Proves that the accounting equation is still in balance. Assets = liabilities-stockholders’ equity

Answer 47

Balance sheet

Question 48

Standards of conduct by which ones actions are judged as right or wrong, fair or unfair, honest or dishonest.

Answer 48

Ethics