Fundamental Accounting Principles, 24e (Wild)
Chapter 1 Accounting in Business
1) Accounting is an information and measurement system that identifies, records, and communicates an organization's business activities.
2) Recordkeeping, or bookkeeping, is the recording of transactions and events, either manually or electronically. This is just one part of accounting.
3) An accounting system captures relevant data about transactions and then classifies, records, and reports data.
4) Financial accounting is the area of accounting aimed at serving external users by providing them with general-purpose financial statements.
5) Internal users of accounting information do not directly run the organization and have limited access to its accounting information.
6) Auditors verify the effectiveness of internal controls.
7) External auditors examine financial statements to verify that they are prepared according to generally accepted accounting principles.
8) External users include lenders, shareholders, customers, and regulators.
9) Regulators often have legal authority over certain activities of organizations.
10) Internal users include lenders, shareholders, brokers and nonexecutive employees.
11) Opportunities in accounting include auditing, consulting, market research, and tax planning.
12) Ethics is defined as maximizing personal wealth, regardless the cost.
13) The Sarbanes-Oxley Act (SOX) requires documentation and verification of internal controls. It also emphasizes effective internal controls.
14) The fraud triangle asserts that the three factors that must exist for a person to commit fraud are opportunity, pressure, and rationalization.
15) Management is not responsible for implementing internal controls and does not need to issue a report on internal controls.
16) A partnership is a business owned by two or more people.
17) Owners of a corporation are called shareholders or stockholders.
18) In the partnership form of business, the owners are called stockholders.
19) The balance sheet shows a company's net income or loss over a period of time.
20) The Financial Accounting Standards Board (FASB) is a group tasked with setting generally accepted account principles (GAAP).
21) The business entity principle means that accounting information reflects a presumption that the business will continue operating instead of being closed or sold.
22) GAAP aims to make information relevant, reliable, and comparable.
23) The business entity assumption means that a business is accounted for separately from other business entities, including its owner or owners.
24) As a general rule, revenues should not be recognized in the accounting records when earned, but rather when cash is received.
25) Specific accounting principles are basic assumptions, concepts, and guidelines for preparing financial statements and arise out of long-used accounting practice.
26) Limited liability and indefinite business life are characteristics of a corporation.
27) A sole proprietorship is a business with multiple owners.
28) Unlimited liability and separate taxation of the business are advantages of a sole proprietorship.
29) A partnership must pay an additional business income tax.
30) Objectives, qualitative characteristics, elements, and recognition and measurement are components of the FASB conceptual framework.
31) Objectivity means that financial information is supported by independent, unbiased evidence; it demands more than a person's opinion.
32) The going-concern assumption presumes that a business will continue operating instead of being closed or sold.
33) The measurement principle prescribes that accounting information is based on subjective opinion rather than cost.
34) The monetary unit assumption means that companies should express transactions in terms such as "a lot" or "very little".
35) The International Accounting Standards Board (IASB) issues International Financial Reporting Standards (IFRS) that identify preferred accounting practices.
36) A limited liability company offers the limited liability of a partnership or proprietorship and the tax treatment of a corporation.
37) A limited liability company offers the limited liability of a corporation and the tax treatment of a partnership or proprietorship.
Chapter 1 Accounting in Business
1) Accounting is an information and measurement system that identifies, records, and communicates an organization's business activities.
2) Recordkeeping, or bookkeeping, is the recording of transactions and events, either manually or electronically. This is just one part of accounting.
3) An accounting system captures relevant data about transactions and then classifies, records, and reports data.
4) Financial accounting is the area of accounting aimed at serving external users by providing them with general-purpose financial statements.
5) Internal users of accounting information do not directly run the organization and have limited access to its accounting information.
6) Auditors verify the effectiveness of internal controls.
7) External auditors examine financial statements to verify that they are prepared according to generally accepted accounting principles.
8) External users include lenders, shareholders, customers, and regulators.
9) Regulators often have legal authority over certain activities of organizations.
10) Internal users include lenders, shareholders, brokers and nonexecutive employees.
11) Opportunities in accounting include auditing, consulting, market research, and tax planning.
12) Ethics is defined as maximizing personal wealth, regardless the cost.
13) The Sarbanes-Oxley Act (SOX) requires documentation and verification of internal controls. It also emphasizes effective internal controls.
14) The fraud triangle asserts that the three factors that must exist for a person to commit fraud are opportunity, pressure, and rationalization.
15) Management is not responsible for implementing internal controls and does not need to issue a report on internal controls.
16) A partnership is a business owned by two or more people.
17) Owners of a corporation are called shareholders or stockholders.
18) In the partnership form of business, the owners are called stockholders.
19) The balance sheet shows a company's net income or loss over a period of time.
20) The Financial Accounting Standards Board (FASB) is a group tasked with setting generally accepted account principles (GAAP).
21) The business entity principle means that accounting information reflects a presumption that the business will continue operating instead of being closed or sold.
22) GAAP aims to make information relevant, reliable, and comparable.
23) The business entity assumption means that a business is accounted for separately from other business entities, including its owner or owners.
24) As a general rule, revenues should not be recognized in the accounting records when earned, but rather when cash is received.
25) Specific accounting principles are basic assumptions, concepts, and guidelines for preparing financial statements and arise out of long-used accounting practice.
26) Limited liability and indefinite business life are characteristics of a corporation.
27) A sole proprietorship is a business with multiple owners.
28) Unlimited liability and separate taxation of the business are advantages of a sole proprietorship.
29) A partnership must pay an additional business income tax.
30) Objectives, qualitative characteristics, elements, and recognition and measurement are components of the FASB conceptual framework.
31) Objectivity means that financial information is supported by independent, unbiased evidence; it demands more than a person's opinion.
32) The going-concern assumption presumes that a business will continue operating instead of being closed or sold.
33) The measurement principle prescribes that accounting information is based on subjective opinion rather than cost.
34) The monetary unit assumption means that companies should express transactions in terms such as "a lot" or "very little".
35) The International Accounting Standards Board (IASB) issues International Financial Reporting Standards (IFRS) that identify preferred accounting practices.
36) A limited liability company offers the limited liability of a partnership or proprietorship and the tax treatment of a corporation.
37) A limited liability company offers the limited liability of a corporation and the tax treatment of a partnership or proprietorship.