Flashcards in Exam 1, Ch 1-3 Deck (49)
What are the (2) major fields of accounting?
1. Financial accounting
2. Managerial accounting
What is the difference between Financial Accounting and Managerial Accounting?
Financial Accounting provides information to EXTERNAL decision makers
Managerial Accounting provides information to INTERNAL decision makers
What is the body of knowledge relied upon to govern accounting in the United States?
GAAP (Generally Accepted Accounting Principles)
What are (2) other - slightly smaller - areas of accounting?
Non-Profit / Governmental Accounting
What is the name of the organization responsible in the United States for maintaining GAAP?
Financial Accounting Standards Board (FASB)
What does CPA stand for?
Certified Public Accounting
What is a licensed professional accountant who serves the general public referred to as?
How is a CPA certified?
Via a state specific examination - resulting in a state license
What is the major ability of a CPA?
To certify that the financial statements of a company are accurate or complete - i.e. Legal
Name (5) examples of ASSET accounts:
2. Accounts Receivable
3. Notes Receivable
4. Prepaid Expense
5. Equipment, Office Supplies, or Furniture
Defn: A written promise that a customer will pay a fixed amount of principal plus interest by a certain date in the future.
Defn: A payment of an expense in advance
Defn: A type of asset account that includes all the business's money. Includes bank balances, bills, coins, and checks
Defn: A type of asset account that is made up of customers promises to pay in the future for services or goods sold.
Described as "On Account"
Name (4) types of LIABILITY accounts:
1. Accounts Payable
2. Notes Payable
3. Accrued Liability
4. Unearned Revenue
Defn: A type of Liability account that is made up of promises made by a business to pay a debt in the future.
Arises from credit purchases
Defn: A type of Liability account composed of written promises made by a business to pay a debt, usually involving interest, in the future.
These promises are between the business and a bank.
Defn: A type of Liability account made up of an amount owed by a business but not yet payed
Defn: A type of Liability account that is created when a business collects cash from customers in advance of providing services or delivering goods
Name (4) types of EQUITY accounts:
1. Owner, Capital
2. Owner, Withdrawal
Defn: Type of Equity account that represents the net contributions of the owner in the business.
Defn: Type of Equity account made up of distributions of cash or other assets to the owner
Defn: Type of Equity account composed of earnings that result from delivering goods or services to customers.
Defn: type of Equity account comprised of the cost of selling goods or services.
Name (2) types of Revenue accounts:
1. Service Revenue
2. Rent Revenue
Name (3) types of Expense accounts:
1. Rent Expense
2. Salaries Expense
3. Utilities Expense
Defn: A list of all of a company's accounts with their account numbers
Chart of Accounts
Defn: The record holding all the accounts of a business, the changes in those account, and their balances
Defn: The balance that appears on the increase side of an account