General
The 3 requirements for accounting accuracy/helpfulness.
What is trusted, relevant, and accurate information?
Trusted - reliable source
Relevant - Number of employees of a supplier's business vs. cost to produce a popular product.
Accurate - correct?
The goal of this type of accounting is to provide information that will help ensure effective business decisions.
What is Managerial Accounting?
A single owner is legally connected/the same as their business.
Business operators need to keep personal financial information separately from the financial information of their business. Give an example.
What is the Business Entity Principle?
What are the 3 financial statements?
Income Statement, Statement of Owner's Equity, Balance Sheet.
The process of recording information.
What is bookkeeping?
The type of accounting used by internal individuals.
What is Managerial Accounting?
A business where two or more owners collectively operate the business and manage profits.
What is a Partnership?
Note: can be 2 owners, can be 247 owners. Still this type of business.
Assets - What you own
Liabilities - What you owe
Equity - How much money has been invested
What does an Income Statement do?
Shows revenues minus expenses of a business over a given time-frame.
An information system.
Acquiring, recording, and reporting information.
The goal of this type is to create reports regarding a business' overall performance.
What is Financial Accounting?
What is a corporation?
What is the purpose of IFRS and GAAP?
To ensure that accounting information is helpful for people. It needs to be standardized so people can compare it, check its accuracy, comprehend it, and it can be reported on time.
What does a Statement of Owner's Equity do?
Show how much money has been reinvested in the business.
This is the certification given to those in the accounting field.
What is a Chartered Professional Accountant (CPA)?
What is Financial Accounting?
A large disadvantage of SP and P businesses, but an advantage for C businesses. Use both, specific, terms.
What is unlimited liability and what is limited liability?
What are revenues and expenses?
Revenue - income that a business obtains for its products and services - not necessarily cash - if someone gets a service/good on credit.
Expenses - The accumulated price/cost for a business' daily processes/operations.
What does a balance sheet do?
Indicates a business' financial state at one time; Assets, Liabilities and Equity
To support decision-making (especially regarding investment decisions and commercial opportunities).
What is the purpose for Accounting?
Name 3 internal and 3 external users of accounting information.
Int: Managers, Marketing, Sales, Employees, Executives, Research and Development, Internal auditors.
Ext: Government auditors, investors, creditors, suppliers, lawyers.
Think of 2 benefits and drawbacks to each type of business structure. Think of one example of each. Write them down in OneNote, or on a piece of paper.
Check Canvas - sorry for the inconvenience.
A rules-based accounting system (little flexibility), used in the US. Every publicly-traded company needs to follow this structure for its financial statements.
What are the Generally Accepted Accounting Principles (GAAP) rules?
What is the balance sheet equation? Bonus points (congratulations - I don't know how to add extra points) for explaining it.
Assets = Liabilities - Equity
You can only buy & own things (assets) by paying for them using your own money (equity) or others' (liabilities).