Exam 1, Ch 1-3 Flashcards Preview

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Flashcards in Exam 1, Ch 1-3 Deck (49)
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1

What are the (2) major fields of accounting?

1. Financial accounting

2. Managerial accounting

2

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

3

What is the body of knowledge relied upon to govern accounting in the United States?

GAAP (Generally Accepted Accounting Principles)

4

What are (2) other - slightly smaller - areas of accounting?

Tax Accounting

Non-Profit / Governmental Accounting

5

What is the name of the organization responsible in the United States for maintaining GAAP?

Financial Accounting Standards Board (FASB)

6

What does CPA stand for?

Certified Public Accounting

7

What is a licensed professional accountant who serves the general public referred to as?

A CPA

8

How is a CPA certified?

Via a state specific examination - resulting in a state license

9

What is the major ability of a CPA?

To certify that the financial statements of a company are accurate or complete - i.e. Legal

10

Name (5) examples of ASSET accounts:

1. Cash
2. Accounts Receivable
3. Notes Receivable
4. Prepaid Expense
5. Equipment, Office Supplies, or Furniture

11

Defn: A written promise that a customer will pay a fixed amount of principal plus interest by a certain date in the future.

Notes Receivable

12

Defn: A payment of an expense in advance

Prepaid Expense

13

Defn: A type of asset account that includes all the business's money. Includes bank balances, bills, coins, and checks

Cash

14

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"

Accounts Receivable

15

Name (4) types of LIABILITY accounts:

1. Accounts Payable
2. Notes Payable
3. Accrued Liability
4. Unearned Revenue

16

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

Accounts Payable

17

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.

Notes Payable

18

Defn: A type of Liability account made up of an amount owed by a business but not yet payed

Accrued Liability

19

Defn: A type of Liability account that is created when a business collects cash from customers in advance of providing services or delivering goods

Unearned Revenue

20

Name (4) types of EQUITY accounts:

1. Owner, Capital
2. Owner, Withdrawal
3. Revenues
4. Expenses

21

Defn: Type of Equity account that represents the net contributions of the owner in the business.

Increases Equity

Owner, Capital

22

Defn: Type of Equity account made up of distributions of cash or other assets to the owner

Decreases equity

Owner, Withdrawal

23

Defn: Type of Equity account composed of earnings that result from delivering goods or services to customers.

Increase equity

Revenues

24

Defn: type of Equity account comprised of the cost of selling goods or services.

Decreases equity

Expenses

25

Name (2) types of Revenue accounts:

1. Service Revenue
2. Rent Revenue

26

Name (3) types of Expense accounts:

1. Rent Expense
2. Salaries Expense
3. Utilities Expense

27

Defn: A list of all of a company's accounts with their account numbers

Chart of Accounts

28

Defn: The record holding all the accounts of a business, the changes in those account, and their balances

Ledger

29

Defn: The balance that appears on the increase side of an account

Normal Balance

30

Defn: A record of transactions in date order

Journal