105.
Accounting terminology
Listed below are nine accounting terms introduced in this chapter:
Each of the following statements may (or may not) describe one of these terms. In the
space provided below each statement, indicate the accounting term described, or answer
“None” if the statement does not correctly describe any of the terms. More than one
statement may describe a single term.
(A.) The repayment to an investor of the amount originally invested in an enterprise.
(B.) An examination of financial statements designed to determine their fairness in
relation to generally accepted accounting principles.
(C.) The accounting standards and concepts used in the preparation of financial
statements.
(D.) A system of measures designed to assure management that all aspects of the
business are operating according to plan.
(E.) A listing of assets, liabilities, and stockholders’ equity as of a specific date.
(F.) The payment of an amount for using another’s money.
(G.) An activity statement that shows the details of the company’s activities involving cash
during a period of time.
106.
Users of accounting information
List seven groups that would typically use financial information.
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107.
Accounting Terminology
Listed below are 8 accounting terms.
Each of the following statements may (or may not) describe one of these terms. In the
space provided, indicate the accounting term described or answer “None” if the statement
does not accurately describe any of the terms.
(A.) Information describing the financial resources, obligations, and activities of an
economic entity.
(B.) An entity’s financial resources and obligations at a point in time.
(C.) Accounting information intended specifically to assist company’s management.
(D.) The personnel, procedures, and technology used by an organization to develop
accounting information and to communicate this information to decision makers.
(E.) An entity’s financial activities during the year.
(F.) Measures used by an organization to guard against errors, waste, and fraud and to
assure the reliability of accounting information.
(G.) A plan of financial operations for some future period.
(H.) A written assertion identifying, measuring, and communicating financial information
about an economic entity.
108.
Financial statements
Briefly describe the balance sheet, the income statement, and the statement of cash
flows.
109.
Objectives of financial reporting
List and briefly describe the objectives of financial reporting beginning with the most
general and ending with the most specific.
110.
Financial and management accounting information
Explain one way in which the characteristics of financial and management accounting
information differ.
111.
Investors and creditors are interested in a company’s “
cash flow prospects.”
What two
specific concerns of investors and creditors are summarized by the term
“cash flow
prospects
?”
112.
List the three financial statements that are used to communicate financial accounting
information to interested external parties.
113.
Provide a brief example to illustrate that externally reported financial accounting
information must be based in part on estimates, judgments, and assumptions.
114.
Development of generally accepted accounting principles
(A.) What is meant by the phrase “generally accepted accounting principles”?
(B.) Give the names of three organizations that currently play an active role in the
development of accounting principles in the United States.
115.
Briefly explain how generally accepted accounting principles enhance the integrity of
financial accounting information.
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116.
AICPA Code of Professional Conduct
State and discuss the six articles of the AICPA Code of Professional Conduct that guide
members in performing their professional responsibilities.
117.
Accounting terminology
Listed below are seven accounting organizations introduced in this chapter:
Each of the following statements may (or may not) describe one of these organizations. In
the space provided below each statement, indicate the accounting organization described,
or answer “None” if the statement does not correctly describe any of the organizations.
(A.) Private sector organization that establishes accounting standards.
(B.) A professional organization that establishes standards for the conduct of professional
services other than audits.
(C.) A government organization that establishes financial reporting requirements for
publicly-held companies in the United States.
(D.) A federal government agency that audits many other agencies of the federal
government and reports its findings to Congress.
(E.) A professional organization dedicated to the improvement of accounting education,
research, and practice.
(F.) A professional organization that influences the concepts and ethical practice of
management accounting.
(G.) A professional organization that establishes global accounting standards.
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Matching Questions
118.
Match the organizations on the left with the descriptions on the right. Each description
should be used only once.
1. Financial
Accounting
Private organization most directly
involved in the development and issuance
2. Institute of
Management
Government agency that regulates
financial reporting by publicly-held
3. Internal Revenue
Organization dedicated to the
advancement of accounting education and
4. Securities and
Exchange
International organization dedicated to
5. Institute of
Organization which develops formal
6. American
Accounting
Organization most involved with the
ethical conduct of the accountants working
7. Public Company
Accounting
A governmental agency that handles
income tax returns of individuals and
businesses and performs an audit function