Users of Accounting Information
People that use accounting information are divided into two groups. Name those two groups of people.
External Users
Internal Users
What is ethics?
Beliefs that separate right from wrong.
The _____ Principle states that accounting information is based on actual cost.
Measurement (Cost) Principle
State the Accounting Equation
Assets = Liabilities + Equity
Which financial statement is prepared first?
Income Statement
Is a creditor an external or internal user?
External
Opportunity, Pressure, and Rationalization
The ____ Principle states that revenue is recognized when goods or services are provided to customers and at the amount expected to be received from the customer.
Revenue Recognition Principle
Resources a company owns or controls are _______.
Assets
What are the components of the Income Statement?
Revenues - Expenses = Net Income (Loss)
Is a shareholder/investor an external user or an internal user?
External
What are the policies and procedures used by a business to protect assets, ensure reliable accounting, promote efficiency, and uphold company policies?
Internal Controls
The ______ assumption states that transactions and events are expressed in monetary units.
Monetary Unit Assumption
Do dividends increase or decrease equity?
Decrease
What are the components of the Balance Sheet?
Assets, Liabilities, and Equity
What type of user is a purchasing manager?
Internal User
What does GAAP stand for?
Generally Accepted Accounting Principles
The ____ assumption states that accounting information presumes that the business will continue operating instead of being closed or sold.
Going-Concern Assumption
__________ are the owner's claims on assets.
Equity
Which financial statement would equipment most likely appear?
Balance Sheet
What type of user is a payroll coordinator?
Internal user
A(n) _________ examines whether financial statements are prepared using GAAP or not.
Audit
The ____ assumption states that a business is accounted for separately from other business entities and its owners.
Business Entity Assumption
Does common stock increase or decrease equity?
Income Statement