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Account concepts
Accounting concepts
| Question | Answer |
|---|---|
| Describe the purpose and the role and purpose of accounting. | -accumulate, measure, and communicate financial information about businesses. -provides information for making informed decisions about how to best use available resources. -Accounting is often called the “language of business.” |
| Describe the users of accounting information. | External &Internal |
| Accounting analysis | seeing if business events should be captured by the accounting system or not. |
| Accounting book-keeping | day to day keeping track of transactions. |
| Accounting evaluation | using financial data to determine the health and performance of a business. |
| Who are the External users of accounting information. | lenders, investors, competitors |
| who are the Internal users of accounting information. | internal stakeholders, suppliers, customers, employees |
| how do lenders use accounting information | to access the probability of receiving their capital and interest back. |
| how do investors use accounting information | to see how much money they can expect in the future |
| how do competitors use accounting information | use others financial reports to find their weakness and their strengths. |
| how do suppliers and customers use accounting information | used to assess the long run prospects of a company. |
| how do employees use accounting information | see their expected future within the company |
| who are the external accounting bodies that influence accounting? | FASB, GASB, SEC, AICPA, IRS |
| How does the FASB financial accounting standards board influence accounting? | they set the Gaap standards of accounting that should be followed but do not enforce them. |
| how does the GASB Governmental accounting standards board? influence accounting | sets the accounting and financial reporting standards for state and local governments. |
| How does the SEC fluence accounting? | creates a fair environment in which investors can buy and sell stocks without fear that companies are hiding or manipulating financial data. |
| How does the AICPA influence accounting | they govern over the cpas and cpa firms |
| How does the IRS influence accounting? | sets Income tax rules |
| Identify the purpose of the financial accounting cycle. | Collecting, analyzing, and summarizing financial information |
| *Identify the types of transactions within the financial accounting cycle. | Internal, external, and arm's length transactions. |
| * Identify where to locate financial statements for publicly traded companies. how to find a company's 10-k | |
| Describe the characteristics of a balance sheet. | lists as of today of all your Resources and Obligations and the owner's equity |
| Describe the elements of a balance sheet. | current & long term assets, current a liabilities & long term labilities owners equity. assets = liabilities + equity |
| Describe the purpose of a balance sheet. | a summary of the financial position of a company at a certain date. How much you have how much you owe. |
| Describe the characteristics of the income statement. | shows how much did you make at a certain time. |
| Describe the purpose of the income statement. | shows the results of a company’s operations for a period of time. shows the revenues generated and the costs incurred (expenses) to generate those revenues. |
| Describe the elements of the income statement. | revenues, expenses, interest, net income revenues - expenses = net income |
| Describe the elements of a statement of retained earnings. | retained earning prior year, net income, dividends, retained earnings. retained earning + net income - dividends = retained earnings |
| Describe the purpose of a statement of retained earnings. | displays the changes in retained earnings from one accounting period to the next. |
| Describe the elements of a statement of cash flows. | cash flow from operating, investing and financial activities. net cash used from each activity |
| Describe the purpose of a statement of cash flows. | shows the cash inflows (receipts) and cash outflows (payments) of an entity during a period of time. |
| Identify the purpose of the notes to the statements. | Additional information on the financial statements. Gives information about the methods used in preparing the statements and more detail about specific items. |
| Explain how a company manages cash inflows and outflows. | involves managing accounts receivable & accounts payable. budgeting receipts and disbursements |
| Explain the role of a master budget to help a business control its profitability. | the business starts with a sales budget then it creates a production budget for costs related to creating the product. and a selling administrative budget for admin costs |
Created by:
tayshaylyric
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