What is accounting?
What is the primary purpose of accounting?
To retrieve, record, store, and summarize financial transactions for a business.
What is the first step in the accounting cycle?
Analyze/Record transactions
Which type of accounting is used to develop information for outside sources such as investors?
Financial Accounting
What does the acronym GAAP stand for?
Generally Accepted Accounting Principles
What refers to a company’s moral duty to uphold laws and regulations?
Ethical Responsibility
How does accounting help management?
It helps management determine the financial health of a business to make informed decisions.
What is the unadjusted trial balance?
A report that lists the balances of all accounts before adjustments are made
Which type of accountant is able to work with multiple clients in different industries?
Public Accountant
An expense being reported at the same time as its corresponding revenue is an example of which of the following principles?
Matching Principle
What refers to additional costs beyond normal business costs due to an activity or policy?
Social Cost
What is the difference between bookkeeping and accounting?
Bookkeeping is the process of recording daily transactions, while accounting encompasses a broader process including analysis and reporting.
What does the term 'ledger' refer to in accounting?
A collection of a business' financial transactions
What type of accountant is considered "internal" for a company?
Management
What does the reliability principle require?
Accountants must record only verifiable information
Which of the following can be defined as an individual who owns a part of a company through stock ownership?
Shareholder
Name one type of accounting system.
Manual accounting or computerized accounting (e.g., QuickBooks).
What is the purpose of preparing financial statements?
To report the financial performance and position of a business to stakeholders
What type of accountant would investigate crimes for law enforcement?
Forensic
What is the cost principle in GAAP?
It states that assets should be recorded at their actual cost, not current market value.
How do ethical standards in accounting protect stakeholders?
They ensure transparency and trustworthiness in financial reporting.
Which of the following occurs when the amount of money earned is greater than the amount of money spent?
Profit
What are two types of business transactions?
exchange and non-exchange transactions
What are two professional certifications for accountants?
CPA and CMA
Why are GAAP principles important?
They ensure accuracy and consistency in financial reporting.
Why might accountants face pressure to break rules?
Due to financial troubles within the company they are working for.