ACC Chapter 1

Accounting measures

Accounting summarizes

Accounting communicates

Financial Accounting provides information for ___________ users, such as ________, _________, the government, and the public.

What type of accounting consists of more formal reporting?

Management Accounting provides information for __________ users

Managerial has more/less formal reporting and is exemplified by

Who uses accounting information?

Who manages bank accounts and budgets; operate small businesses

Analyzes a company's ability to provide an adequate return on investment/meet debt repayments

The IRS (taxing authority) and the Security and Exchange Commissions are considered under which group?

Hospitals and Charities base operating decisions on accounting data - this is an example of a

What are the 5 different types of business organizations?

How many owners does a sole proprietorship have?

How many owners does a general partnership have?

How many owners does a limited liability partnership have? (LLP)

How many owners does a limited liability company have?

How many owners does a corporation have?

What are the pros of a proprietorship?

What are the cons of a proprietorship?

What are the pros of a general partnership?

What are the cons of a general partnership?

What are the pros of a limited liability partnership? (LLP)

What are the cons of a limited liability partnership? (LLP)

What are the pros of a limited liability company? (LLC)

What are the cons of a limited liability company? (LLC)

What are the pros of a Corporation?

What are the cons of a Corporation?

Which form of business will enable EVERY owner to limit their personal liability while also avoiding "double taxation"? Why?

Which form of business will allow an individual owner the most freedom to manage the business as they wish? Why?

Which form of business will give the company's creditors maximum protection in the event that the company fails and cannot pay its debts? Why?

Which form of organization is the most common form of business in the US?

What form of organization is the largest in terms of assets, income, and employees?

Financial Accounting is governed by ______________, which are accounting guidelines, formulated by the Financial Accounting Standards Board that govern how accountants measure, process, and communicate financial information

What is the overall objective with Accounting?

For information to be useful, it must be

To be relevant and faithfully represented, information must be

For information to be comparable, it must be

For information to be verifiable, it can be

For information to be timely, it must be

For information to be understandable, it must be

The ________ of disclosure should not exceed the expected _____________

What is the assumption that all organizations stand apart as separate economic unit? (Separate accounting records for owner and business)

What is the assumption that the entity will continue to exist infinitely?

The Principal that assets are recorded at their actual cost (the amount paid on the date of purchase)

The Assumption that the dollar's purchasing power is stable over time (ex. Ignore inflation)

What principle/assumption is violated? "Honest" Frank Lee owns a law firm. With dividends from his practice, he has purchased personal investments. These investments are reflected on the balance sheet of his legal practice at original cost.

What principle/assumption is violated? "Honest" Frank purchased the land for the office 10 years ago for \$26,000. The bank appraised the land for \$30,000 and accordingly loaned his practice the money to buy the land. "Honest" Frank recorded the land at the appraised value, \$30,000.

What is the accounting equation?

Economic resources expected to provide a future benefit

Cash, merchandise inventory, and equipment are considered to be an

Creditor (outsider) claims on assets. These represent an obligation to pay (payables) or for performance

Wages payable, accounts payable are considered to be a

Equity represents owner (insider) claims on assets

There are 2 distinct components of owner's equity, what are they?

What is paid in capital?

What are retained earnings?

Retained earnings is determined by

How do you calculate net income?

The inflow of resources that increase net income and retained earnings through delivering goods and services ot customers

The outflow of resources that decrease net income and retained earnings

Expenses are considered the ______ of doing business

Distributions of assets to stockholders which reduce retained earnings

Dividends are NOT an _______

What does an income statement/statement of operation communicate?

In the income statement, what is the last thing calculated?

What does the statement of retained earnings communicate?

In the statement of retained earnings, what do retained earnings represent?

What does a balance sheet communicate?

A classified balance sheet will classify assets and liabilities into

Current assets are expected to be used, sold, or consumed within ________ business cycle. How long is this cycle?

What type of asset is cash?

What type of asset is accounts receivable?

What type of asset are supplies?

What type of asset is inventory?

What type of asset are prepaid expenses

Long term assets are expected to be held and used for

What type of asset is property?

What type of asset is plant?

What type of asset is equipment

Current liabilities are

What type of liability is an accounts payable?

What type of liability is an wages payable?

What type of liability is an unearned revenue?

long-term liabilities are

A long term notes payable is an example of a

Bonds payable is an example of a

What does a statement of cash flows communicate?

What are the three sections in the statement of cash flows?

Common Stock

Accounts payable

Service revenue

Land

Unearned revenue

Note payable

Prepaid rent expense

cash

Retained earnings

Salaries expense

Office furniture

supplies

Supplies expense

Dividends

Salaries payable

Accounts receivable

Net income

What is considered in a balance sheet?

What is considered in an income statement?

What is considered in a statement of retained earnings (SRE)?