-
What is the purpose of Accounting?
To provide financial information about the current operations and financial condition of a business to individuals, agencies, and organizations.
-
Identify four user groups normally interested in financial information about a business.
Owners (present and future), Managers (may or may not own business), Creditors (present and future), Government agencies (national, state and local).
-
Identify the six major steps of the accounting process.
Analyzing, Recording, Classifying, Summarizing, Reporting, Interpreting.
-
Describe the steps followed by the Financial Accounting Standards Board when developing and accounting standard.
- When an accounting issue is identified, the following steps are followed:
- 1. The issue is placed on FASB's agenda. (Lets everyone know the board plans to develop a standard)
- 2. After researching an issue, FASB issues a discussion memorandum. (This identifies the pros and cons)
- 3. The Board will often hold public hearings around the country to gather additional views. (Interested parties are invited to express their opinions)
- 4. The Board issues and exposure draft. (This explains the rules the FASB believes firms should follow)
- 5. The Board issues a final statement of financial accounting standards (SFAS).
-
Identify the three types of ownership structures and discuss the advantages and disadvantages of each.
- Sole Proprietorship (One owner: makes all the decisions/ assumes all risk).
- Partnership (Two or more partners: Partners share risks/ may disagree on how to run business).
- Corporation (Stockholders: have limited risk/ may have little influence on decisions).
-
Identify three types of businesses according to activities.
Service, Merchandising, Manufacturing.
-
What are the main functions of an accounting clerk?
Record, sort and file accounting information. Specialize in cash, payroll, accounts receivable, accounts payable, inventory, or purchases.
-
Name three areas of specialization for a public accountant.
Auditing, Taxation, Management advisory services.
-
Name six areas of specialization for a managerial accountant.
Accounting information systems, financial accounting, cost accounting, budgeting, tax accounting, internal auditing.
-
Describe the kind of information needed by the users listed:
Owners
Managers
Creditors
Government Agencies
- Company's profitability and current financial condition.
- Detailed measures of business performance.
- Company's profitability, debt outstanding, and assets that could be used to secure debt.
- Company's profitability, cash flows, and overall financial condition.
|
|