Basic Accounting Concepts
This is the accounting equation that reflects the relationship between assets, liabilities, and equity.
What is Assets = Liabilities + Equity?
This type of audit opinion is issued when the auditor believes that the financial statements are presented fairly in all material respects.
What is an Unmodified Opinion?
This account type increases with a credit and decreases with a debit.
What is a Liability?
Auditors must maintain this to avoid conflicts of interest and ensure objectivity in their work.
What is Independence?
This software is one of the most widely used accounting platforms for small businesses and freelancers, helping users track expenses, create invoices, and manage taxes.
What is QuickBooks?
This is the name of the financial statement that shows a company’s financial position at a specific point in time.
What is a Balance Sheet?
The first step in an audit is to understand the business and its environment, often by performing this type of assessment.
What is a Risk Assessment?
This is a term for a company’s net income minus dividends paid to stockholders.
What is Retained Earnings?
This is an auditor’s primary responsibility during an audit engagement.
What is to express an opinion on the financial statements?
This term refers to the ability to store and access data on the internet, enabling companies to scale their accounting systems without the need for physical infrastructure.
What is Cloud Computing?
The process of systematically allocating the cost of a long-term asset over its useful life is called this.
What is Depreciation?
This document is provided to the client at the conclusion of the audit, detailing the auditor's opinion on whether the financial statements are presented fairly in accordance with the applicable financial reporting framework.
What is the Audit Report?
This financial statement shows how cash is generated and used in operating, investing, and financing activities.
What is a Cash Flow Statement?
This is the term for an audit that focuses on a company's internal processes and controls rather than the financial statements.
What is an Internal Audit?
This digital transformation tool allows accountants to securely send financial data and documents to clients or colleagues via encrypted digital channels instead of traditional mail.
What is Secure File Sharing or Encrypted Email?
This is the term for the method of accounting that records revenues and expenses when they are incurred, regardless of when cash is exchanged.
What is Accrual Accounting?
This is a system used to track and review financial transactions, ensuring accuracy and compliance.
What is an Internal Control System?
This term refers to the value of a business's physical assets, less accumulated depreciation, which represents the remaining useful value of assets after depreciation has been accounted for.
What is Net Book Value?
This is the process in which auditors evaluate the effectiveness of a company’s internal controls by testing the design and operation of those controls and determining if they are functioning as intended.
What is Control Testing?
This form of digital currency operates outside of traditional banking systems and uses blockchain technology to ensure transparency and security in transactions.
What is Cryptocurrency?
This principle requires that businesses account for all expenses in the period in which they are incurred, rather than when payment is made.
What is the Matching Principle?
This standard-setting body issues the guidelines that govern the practice of auditing in the U.S. and establishes the criteria for auditing standards.
What is the Public Company Accounting Oversight Board (PCAOB)?
This financial statement term refers to a company's ability to meet its short-term financial obligations using its most liquid assets, usually calculated as current assets minus current liabilities.
What is Working Capital?
Auditors are required to communicate the results of their audit findings with this party when a material misstatement is identified, to allow for corrective actions to be taken.
Who are the Audit Committee or Board of Directors?
This digital ledger system, which can be used to record and share financial transactions, gained prominence as the foundation of cryptocurrencies like Bitcoin.
What is Blockchain?