CHAPTER 1- INTERMEDIATE ACCOUNTING

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According to them, Accounting is a process of identifying, measuring and communicating economic information to permit informed judgements and decisions by users of the information.

AMERICAN ASSOCIATION OF ACCOUNTANTS

The following are the accounting processes, EXCEPT:

FINANCING

It is the process of identifying, measuring and communicating economic information to permit informed judgements and decions by users of the information.

ACCOUNTING

It is the system of collecting and processing transaction data and disseminating financial information to interested parties.

ACCOUNTING INFORMATION SYSTEM

Accounting information system is a ________ of Management Information System (MIS)

SUBSYSTEM

It is a set of data gathering, analyzing ad reporting functions it needs to carry out its functions.

MANAGEMENT INFORMATION SYSTEM (MIS)

What are the major components of an MIS?

ACCOUNTING INFORMATION SYSTEM OR FINANCIAL INFORMATION SYSTEM, PERSONNEL INFORMATION SYSTEM, LOGISTICS INFORMATION SYSTEM

These are the specific principles, bases, conventions, rules and practices applied by an entity in preparing and presenting financial statements.

ACCOUNTING POLICIES AND STANDARDS

Set of interrelated activities involving the originating, processing and reporting of financial ad related information.

PROCEDURES

It used in the system to expedite work, to provide controls, and pevent fraud and errors.

EQUIPMENT AND DEVICES

These are necessary to gather, process, store and transmit financial and other information.

RECORDS AND REPORTS

What are the components of accounting information?

PERSONNEL, ACCOUNTING POLICIES AND STANDARDS, PROCEDURES, EQUIPMENT AND DEVICES, RECORDS AND REPORTS

It represent the steps or procedures used in recording transactions and preparing financial statement. It implements the accounting process.

ACCOUNTING CYCLE

The accountant gathers information from source documents and determines the effect of the transactions on the accounts.

IDENTIFYING AND ANALYZING BUSINESS DOCUMENTS OR TRANSACTIONS

The identified accountable events are recorded in the journals

JOURNALIZING

Information from the journal are transferred to the ledger.

POSTING

The balances of the general ledger accounts are proved as to the equality of debits and credits. It serves as basis for adjusting entries.

PREPARING THE UNADJUSTED TRIAL BALANCE

The accounts are updated as of the reporting date in an accrual basis by recording accruals, expiration of deferrals, estimations and other events often not signaled by new source documents.

PREPARING THE ADJUSTING ENTRIES

The equality of debits and credits are rechecked after adjusments are made. It serves as basis for the preparation of the financial statements.

PREPARING THE ADJUSTED TRIAL BALANCE

These are the means by which the information processed is communicated to users.

PREPARING THE FINANCIAL STATEMENTS

This involves journalizing and posting closing entries and ruling the ledger. Temporary accounts (or nominal accounts) are closed and the resulting profit or loss is transferred to an equity account.

CLOSING THE BOOKS

The equality of debits and credits are again rechecked after the closing process.

PREPARING THE POST-CLOSING TRIAL BALANCE

It is usually made at the beginning of the next accounting period to simplify the recording of certain transactions in the next accounting period.

RECORDING THE REVERSING ENTRIES

Preparing the unadjusted trial balance, adjusted trial balance, post-closing trial balance and recording reversing entries are optional.

TRUE

These are the original source materials evidencing a transaction. Ex. sales invoice, offical receipts, vouchers, statements of account, etc.

BUSINESS OR SOURCE DOCUMENTS

Under this system, each transaction is recorded in two parts- debit and credit.

DOUBLE-ENTRY SYSTEM

This concept views each transactiom as having a two-fold effect on values- a value received and a value parted with and each transaction is recorded using at least two accounts.

DUALITY

This concept requires each transaction to be recorded in terms of equal debits and credits.

EQUILIBRIUM

Under this, the difference between income and expenses is computed.

TRANSACTION APPROACH

Under this system, each transaction is recorded through simple narrative. Transactions are not analyzed in terms of debits and credits. Profit or loss for the period is determined through the "capital maintenance approach" or by comparing the beginning and ending balances of equity.

SINGLE-ENTRY SYSTEM

Under this, income and expensesnare recognized when earned or inccured, regardless of when cash is received or paid.

ACCRUAL BASIS

Income and expenses are recognized when received or paid, regardless of when earned or incurred.

CASH BASIS

It is the process of recording transactions in the journak by means of journal entries.

JOURNALIZING

It is also called the book of original entry, it is a formal record where transactions are initially recorded chronological through journal entries.

JOURNAL

A book of original entry used to record transactions other than those that are recorded in the special journals. If special journals are not utilized, all transactions are recorded in this type of journal.

GENERAL JOURNAL

A book of original entry used to record transactions of a similar nature.

SPECIAL JOURNAL

Used to record purchases of inventory on account.

PURCHASE JOURNAL

Used to record all transactions involving receipts of cash.

CASH RECEIPTS JOURNAL

Used to record sales on account

SALES JOURNAL

Used to record all transactions involving payments of cash

CASH DISBURSEMENT JOURNAL

One which contains a single debit and a single credit element.

SIMPLE JOURNAL ENTRY

One which containw two or more debits or creditsm

COMPOUND JOURNAL ENTRY

Entries made prior to the preparation of financial statements to update certin accounts so that they reflect correct balances as at the designated time.

ADJUSTING ENTRIES

Entries made at the end of the accounting period after all adjustments have been made to zero-out the balances of all nominal accounts and to update the retained earnings account

CLOSING ENTRIES

Entries usually made on the first day of the accounting period to reverse certain adjusting entries in the immediately preceing period.

REVERSING ENTRIES

Entries made to correct accounting errors

CORRECTING ENTRIES

Entries made to transfer an amount from one account to another account that better describes the nature of the transaction being recorded.

RECLASSIFICATION ENTRIES

It is the process of transferring data from the journal to the appropriate accounts in the ledger. The purpose of it is to classify the effects of transactions on specific asset, liability, equity, income and expense accounts in order to provide more meaningful information.

POSTING

It is also called the book of secondary entries or book of final entries. It is a systematic compilation of a group of accounts.

LEDGER

Contains all the accounts appearing in the trial balance.

GENERAL LEDGER

Provides a breakdown of the balances of controlling accounts.

SUBSIDIARY LEDGER

It is one which consist of a group of accounts with similar nature.

CONTROLLING ACCOUNT

It is the basis storage of information in accounting.

ACCOUNT

List of all the accounts used by the entity.

CHART OF ACCOUNTS

Accounts that are not closed at the end of the accounting period. These accounts are shown in the statement of financial position.

REAL (PERMANENT) ACCOUNTS

These are accounts that are closed at the end of the accounting period.

NOMINAL (TEMPORARY) ACCOUNTS

These are accounts that have both real and nominal account components.

MIXED ACCOUNTS

These are accounts that are deducted from a related account, e.g., accumulated depreciation

CONTRA ACCOUNTS

These are accounts that are added to a related account., e.g, premium on bonds payable.

ADJUNCT ACCOUNTS

It is a list of general ledger accounts and their balances. It is prepared to check the equality of total debits and total credits in the ledger.

TRIAL BALANCE

This is prepared before adjusting entries. It contains real, nominal and mixed accounts.

UNADJUSTED TRIAL BALANCE

This is prepared after adjustin entries. It contains real and nominal accounts.

ADJUSTED TRIAL BALANCE

It is prepared after the closing process. It contains real accounts only.

POST-CLOSING TRIAL BALANCE

It is committed when the number of digits in an amount is incorrectly increased or decreased.

TRANSPLACEMENT ERROR

It commited when the digits in an mount are interchanged.

TRANSPOSITION ERROR

These are entries made prior to the preparation of financial statements to update certain accounts so that they reflect correct balances as of the designated time.

ADJUSTING ENTRIES

Under this method, advanced collections of income are initially credited to a liability account. At the end of the period, the earned portion is recognized as income while the unearned portion remains as liability

LIABILITY METHOD

Under this method, advanced collections of income are initially credited to a income account. At the end of the period, the earned portion is recognized as income while the unearned portion remains as income

INCOME METHOD

Under this method, prepayments of expenses are initially debited to an asset account. At the end of the period, the incurred portion is recognized as expense while the unused portion remains as asset.

ASSET METHOD

Under this method, prepyments of expenses are initially debited to an expense account. At the end of the period, the unused portion is recognized as asset while thr incured portion remains as expense.

EXPENSE METHOD

It is an analytical device used to facilitate the gathering of data for adjustments and the preparation of financial statemenrs and closing entries.

WORKSHEET

These are the means by which the information accumulated and processed in financial accounting is periodically communicated to the users. It is the end products of the accounting process.

FINANCIAL STATEMENTS

VITMOLOGY-PPT2

Anndrea S. Galupo · 22問 · 1年前

VITMOLOGY-PPT2