Types of business

Depends on the size and nature of the item judged in the particular circumstances of its omission

It is, therefore, similar to bookkeeping except that data are recorded in very much greater detail.

is focused on the recording of business transactions and the periodic preparation of reports on financial position and results of operations.

Forms of business organization

Tends to be small service type (e.g. physicians, lawyers, and accountants) businesses and retail establishments

A significant function of accounting

Ideally, accounting records are based on information that flows from activities documented by objective evidence

Expenses should be recognized in the accounting period in which goods and services are used up to produce revenue and not when the entity pays for those goods and services

Accounting considers the partnership as a _____, DISTINCT from the personal affairs of each partner

The ______ is built on FIVE activities

This is the basis for ignoring the effects of inflation in the accounting records

Are produced to aid management and planning, control and decision making and to comply with regulations

Summarization of financial data is achieved through the preparation of _______

They provide the required capital for the business

Is an organization a section of an organization that stands apart from other organizations and individuals as a separate economic unit

Involve the selection and management including disposal and replacement of long term resources that will be used to develop, produce, and sell goods and services

SOLE PROPRIETORSHIP has a single owner called the ____ who generally is also the _______.

In order that accounting information will be useful, it must be expressed in terms of

Money serves as both a

Is distinct from its proprietor

Is a separate legal entity

States that acquired assets should be recorded as their actual cost and not at what management thinks they are worth as at reporting date

Involve the use of resources to design, produce, distribute, and market goods and services

This business organization has a single owner called the PROPRIETOR who generally is also the MANAGER.

is a service activity

A PARTNERSHIP is owned and operated by _______ who bind themselves to contribute money, property, or industry to a common fund, with the intention of dividing the profits among themselves

Once the required financial statements have been prepared by management they have to be evaluated in order to ensure that they do not present at the started picture

The firm should use the same accounting method from period to period to achieve comparability over time

These summarize the effects of all business transactions that occur during some period

What are the eight branches of accounting

Is a reasonable unit of measure and that its purchasing power is relatively stable

An accounting entity is an organization or a section of an organization that stands apart from other organizations and individuals as a separate economic unit

Are the methods an organization uses to obtain financial resources from financial markets and how it manages these resources

Corporation is a

For the purpose of reporting to others, ______ is the usual accounting period

______ are responsible for setting financial objectives, making plans based on those objectives, obtaining the finance needed to achieve the plans, and generally safeguarding all the financial resources of the entity.

Is a mechanical task involving the collection of basic financial data

Is an information system that measures, processes and communicates financial information about an economic entity. (_____)

makes use of those data once they have been extracted from the cost books in providing information for managerial planning and control.

To measure a business transaction the accountant must decide when the transaction occurred (RECOGNITION ISSUE) what value to place on the transaction (______) and how the components of the transaction should be classified (CLASSIFICATION ISSUE)

incorporates all types of financial and non-financial information from a wide range of sources.

Before the effects of transactions can be recorded, they must be

A common financial denominator

corporation is owned by

Is a reasonable unit of measure on that its purchasing power is relatively stable

Provides the decision makers with information to make reason choices among alternative uses of scarce resources in the conduct of business and economic activities

It will be aimless to wait for the actual last day of operations to perfectly measure the entities profit

Serves as both a medium of exchange and measure of value

A business owned and operated by TWO OR MORE PERSONS who bind themselves to contribute money, property, or industry to a common fund, with the intention of dividing the profits among themselves

After going through the preceding faces it is imperative but the result of the summarization phase be _____ to evaluate the liquidity profitability and solvency of the business organization

To measure a business transaction the accountant must decide when the transaction occurred (_____) what value to place on the transaction (VALUATION ISSUE) and how the components of the transaction should be classified (CLASSIFICATION ISSUE)

Requires that all relevant information that would affect the users understanding and assessment of the accounting entity be disclosed in the financial statements

An entity's life can be meaningfully subdivided into equal time periods for reporting purposes

It should also be noted that the _____ draws on a much wider range of disciplines (such as economics and mathematics) and relies more extensively on non-financial data than does the more traditional accountant.

Is the process that involves the recording of cost data in books of accounts.

The concept allows the users to obtain timely information to serve as a basis on making decisions about future activities

Without this principle, accounting records would be based on whims and opinions and therefore subject to disputes

It is an ARTIFICIAL BEING created by operation of law, having the rights of succession and the powers, attributes, and properties expressly authorized by law or incident to its existence

Include buying land, equipments, buildings and other resources that are needed in the operation of the business and selling these resources when they are no longer needed

Each partner is personally liable for any debt incurred by the partnership

To measure a business transaction the accountant must decide when the transaction occurred (RECOGNITION ISSUE) what value to place on the transaction (VALUATION ISSUE) and how the components of the transaction should be classified (_______)

Prepaying the creditors and paying a return to the owner are also

Financial reporting is only concerned with information that is significant enough to affect evaluations and decisions

Is only concerned with information that the significant enough to affect evaluations in decisions

Is the process of identifying, measuring, and communicating economic information to permit inform judgements and decisions by users of the information. (_______)

deals with the collection, allocation, and control of the cost of producing specific goods and services.

is the more specific term applied to the preparation and subsequent publication of highly summarized financial information.

It can be converted into another type of asset that will be used in the business (e.g equipment) or sold (e.g. inventory)

Accounting records and statements are based on the most reliable data available and so that they will be as accurate as possible

This accumulation and explanation of actual and prospective cost data is important to control Current operations and to plan for the future.

Are the economic activities of a business

What are the four fundamental concepts

Examples of creditors

______ of financial data is achieved through the preparation of financial statements

In deciding whether an item or an aggregate of items is material, the nature and size of the item are evaluated together

incorporates cost accounting data and adapts them for specific decisions which management may be called upon to make.

______ are verifiable when they can be confirmed by independent observation

Primary sources of financing

Is an information system that measures, processes and communicates financial information about an economic entity. (STATEMENT OF FINANCIAL ACCOUNTING CONCEPTS NO.1)

Is the process of identifying, measuring, and communicating economic information to permit inform judgements and decisions by users of the information. (AMERICAN ACCOUNTING ASSOCIATION)

Its function is to provide quantitative information, primarily financial in nature, about economic entities that is intended to be useful in making economic decisions. (STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO.1)

It allows accountants to add and subtract peso amounts as though each peso has the same purchasing power as any other peso anytime

The owner receives all the profits, absorbs all losses and this solely responsible for all debt of the business

Are not personally liable for the corporation debts

Include research and development, design and engineering, purchasing, human resources, production, distribution, marketing, and selling and servicing

what are the seven basic principles

This can be spent on operating costs such as salaries, rentals and utilities

Business owned by its stockholders

Reduces the effects of numerous transactions into useful groups or categories

Its function is to provide quantitative information, primarily financial in nature, about economic entities that is intended to be useful in making economic decisions. (_______)

Recording these historical events as a significant function of accounting

Is the independent examination that ensures the fairness and reliability of the reports that management submits to users outside the business entity

To be useful in making decisions, the recorded data must be

The accounting records of _____ does not include the proprietor's financial records

The FUNDAMENTAL BUSINESS MODEL is built on _____ activities

Activities in business organization

The data are first entered in the accounting records or the books of accounts, and then extracted, classified and summarized in the form of income statement, balance sheet and cash flows statement.

Is the accountancy professions most significant service to the public

Revenue is to be recognized in the accounting period when goods are delivered or services are rendered or performed