5TH QTR Mr. Bridgewater- Accounting- Quiz #1

Question Answer
now data entry/recording is done on a computer
classifying the sorting of the many business transactions in an orderly and systematic manner
summarizing bringing accounting data together in a way that will further enhance its usefulness, usually by means of reports and statements .
reporting telling the results in accounting it is common to use tables of numbers to report the results
interpreting explaining the significant events of developments that occur usually taking the form of analysis and comparisons
bookkeeping the recording of financial information in a prescribed manner
bookkeeper aka information processor
information processor aka bookkeeper
bookkeeper/information processor one who is involved in the process of recording financial information in a prescribed manner
bookkeeping focuses on processing of accounting data
accountants design the accounting information system and focuses on analyzing and interpreting information
accountant one who is concerned with the design of the system of records, the preparation of reports based upon the recorded data, and the interpretation of the reports
public accountant an accountant whose services are available to the public at large in contrast to one employed on a full time basis by a company
certified public accountant title of qualified accountants in the u.s. who have passed the uniform certified public accountant examination and have met additional state education and experience requirements for certification as CPA
auditing a complete and careful examination of the financial records of a business or person
the entire accounting process is based on one simple equation called the accounting equation
business entity concept nonbusiness assets and liabilities are not included in the business entitys account records
the three basic accounting elements assets liabilities owners equity
assets property of monetary value owned by a business
current assets cash and other assets that will be converted into cash or consumed within one year
cash coins, currency/paper money, checks, credit card receipts and money orders received from others as well as money deposited in the bank
petty cash fund a fund of currency and coin established for the payment of small amounts of money
accounts receivable an unwritten promise to pay at a later date for goods sold or services rendered
prepaid expense items which are considered to be assets when acquired but which will become expenses when consumed or used
supplies a type of asset that will be consumed as it is used (examples include: embalming supplies and office supplies)
inventory (merchandise) goods purchased for resale at a profit
fixed assets/long term assets property of a relatively permanent nature used in the operation of a business and not intended for resale
fixed assets aka long term assets
inventory aka merchandise
tangible assets those assets that can be touched
examples of tangible assets instruments equipment automobiles furnishings land and building
intangible assets those assets that cannot be touched or grasped
examples of intangible assets patents copyrights goodwill
liabilities any debts of a business that are generally paid within one year
accounts payable an unwritten promise to pay creditors for property such as merchandise supplies or equipment purchased on credit or for services received on credit
taxes payable when taxes need to be paid out by the business, the business will record the amount of taxes in a payable account such as income tax payable
wages payable this account is used to record employee compensation that has not yet been received by the employee
fixed liabilities/long-term liabilities liabilities that are not due and payable within one year
fixed liabilities aka long-term liabilities
long-term liabilities aka fixed liabilities
mortgage payable a longterm liability; a written promise that pledges real property (land and whatever is attached to the land)
notes payable written promise to pay creditor a certain amount of money in the future.
bonds payable the amount due on a bond when it reaches maturity date
account = unwritten
notes = written
out of the "payable" section which are most common accounts payable notes payable
capital/net worth/owners equity/proprietorship the amount by which the total assets exceed the total liabilities of a business; an owners financial interest in a business
capital aka net worth owners equity proprietorship
if there are no business liabilities the owners equity is equal to the total assets
the accounting process analyzing recording classifying summarizing reporting interpreting
accounting a language of business employed to communicate financial information based upon analyzing recording, classification, summarization, reporting, and interpretation of financial data.
analyzing looking at the events that have taken place and thinking about how they affect the business
data entry/recording the committing of a business transaction and the events surrounding such into writing
in the past data entry/recording was done with pen and paper

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