Accounting 101: Chapter 1-3 Exam
Questions and Answers
What is accounting - ANSWER-Accounting provides financial information about a
business or a nonprofit organization. Owners, managers, investors, and other interested
parties need financial information in order to make decisions. Because accounting is
used to communicate financial information, it is often called the "language of business."
Accounting Defined - ANSWER-Accounting is the process by which financial
information about a business is recorded, classified, summarized, interpreted, and
communicated to owners, managers, and other interested parties.
Accounting System - ANSWER-An accounting system is designed to accumulate data
about a firm's financial affairs, classify the data in a meaningful way, and summarize it in
periodic reports called financial statements
Financial statements - ANSWER-Periodic reports of a firm's financial position or
operating results
What does an accountant do? - ANSWER-establishes the records and procedures that
make up the accounting system,
supervises the operations of the system,
interprets the resulting financial information.
Accountants usually choose to practice in one of three areas: - ANSWER-public
accounting
managerial accounting
governmental accounting
Occupation: Bookkeeping, Accounting, and Auditing Clerks - ANSWER-Bookkeeping,
accounting, and auditing clerks produce financial records for organizations. They record
financial transactions, update statements, and check financial records for accuracy.
High school diploma or equivalent
,Occupation: Budget Analysts - ANSWER-Budget analysts help public and private
institutions organize their finances. They prepare budget reports and monitor
institutional spending.
BA
Occupation: Cost Estimators - ANSWER-Cost estimators collect and analyze data to
estimate the time, money, resources, and labor required for product manufacturing,
construction projects, or services. Some specialize in a particular industry or product
type.
BA
Occupation: Financial Analysts - ANSWER-Financial analysts provide guidance to
businesses and individuals making investment decisions. They assess the performance
of stocks, bonds, and other types of investments.
BA
Occupation: Financial Managers - ANSWER-Financial managers are responsible for the
financial health of an organization. They produce financial reports, direct investment
activities, and develop strategies and plans for the long-term financial goals of their
organization.
BA
Occupation: Management Analysts - ANSWER-Management analysts, often called
management consultants, propose ways to improve an organization's efficiency. They
advise managers on how to make organizations more profitable through reduced costs
and increased revenues.
BA
Occupation: Personal Financial Advisors - ANSWER-Personal financial advisors give
financial advice to people. They help with investments, taxes, and insurance decisions.
BA
Occupation: Postsecondary Teachers - ANSWER-Postsecondary teachers instruct
students in a wide variety of academic and vocational subjects beyond the high school
level. They also conduct research and publish scholarly papers and books.
MA or DOC
, The auditor's report - ANSWER-The auditor's report contains the auditor's opinion about
the fair presentation of the operating results and financial position of the business. The
auditor's report also confirms that the financial information is prepared in conformity with
generally accepted accounting principles. The financial statements and the auditor's
report are made available to the public, including existing and potential stockholders.
An independent Accountant's review of a firm's financial statement
Business Transaction - ANSWER-A business transaction is any financial event that
changes the resources of a firm. For example, purchases, sales, payments, and
receipts of cash are all business transactions. The accountant analyzes each business
transaction to decide what information to record and where to record it.
When a business transaction occurs, it is analyzed to identify how it affects the equation
property equals financial interest.
To analyze the effect of a business transaction... - ANSWER-1) Describe the financial
event.
Identify the property.
Identify who owns the property.
Determine the amount of increase or decrease.
2) Make sure the equation is in balance.
Property = - ANSWER-Financial Interest
Equity/Capital - ANSWER-An owner's financial interest in the business is called equity,
or capital.
For example. Eli put 100,000 into his businesses bank account. Eli has 100,000 in
equity.
Buying an Account - ANSWER-An arrangement that allows payment at a later date.
Also called a charge-account or open-account credit
Accounts Payable - ANSWER-Amount a business must pay in the future.
Transaction - ANSWER-Any financial event that changes the resources firm
History of Accounting - ANSWER-The system of accounting we use is based upon the
works of Luca Pacioli, a Franciscan monk in Italy. In 1494, Pacioli wrote about the
bookkeeping techniques in practice during his time.
Questions and Answers
What is accounting - ANSWER-Accounting provides financial information about a
business or a nonprofit organization. Owners, managers, investors, and other interested
parties need financial information in order to make decisions. Because accounting is
used to communicate financial information, it is often called the "language of business."
Accounting Defined - ANSWER-Accounting is the process by which financial
information about a business is recorded, classified, summarized, interpreted, and
communicated to owners, managers, and other interested parties.
Accounting System - ANSWER-An accounting system is designed to accumulate data
about a firm's financial affairs, classify the data in a meaningful way, and summarize it in
periodic reports called financial statements
Financial statements - ANSWER-Periodic reports of a firm's financial position or
operating results
What does an accountant do? - ANSWER-establishes the records and procedures that
make up the accounting system,
supervises the operations of the system,
interprets the resulting financial information.
Accountants usually choose to practice in one of three areas: - ANSWER-public
accounting
managerial accounting
governmental accounting
Occupation: Bookkeeping, Accounting, and Auditing Clerks - ANSWER-Bookkeeping,
accounting, and auditing clerks produce financial records for organizations. They record
financial transactions, update statements, and check financial records for accuracy.
High school diploma or equivalent
,Occupation: Budget Analysts - ANSWER-Budget analysts help public and private
institutions organize their finances. They prepare budget reports and monitor
institutional spending.
BA
Occupation: Cost Estimators - ANSWER-Cost estimators collect and analyze data to
estimate the time, money, resources, and labor required for product manufacturing,
construction projects, or services. Some specialize in a particular industry or product
type.
BA
Occupation: Financial Analysts - ANSWER-Financial analysts provide guidance to
businesses and individuals making investment decisions. They assess the performance
of stocks, bonds, and other types of investments.
BA
Occupation: Financial Managers - ANSWER-Financial managers are responsible for the
financial health of an organization. They produce financial reports, direct investment
activities, and develop strategies and plans for the long-term financial goals of their
organization.
BA
Occupation: Management Analysts - ANSWER-Management analysts, often called
management consultants, propose ways to improve an organization's efficiency. They
advise managers on how to make organizations more profitable through reduced costs
and increased revenues.
BA
Occupation: Personal Financial Advisors - ANSWER-Personal financial advisors give
financial advice to people. They help with investments, taxes, and insurance decisions.
BA
Occupation: Postsecondary Teachers - ANSWER-Postsecondary teachers instruct
students in a wide variety of academic and vocational subjects beyond the high school
level. They also conduct research and publish scholarly papers and books.
MA or DOC
, The auditor's report - ANSWER-The auditor's report contains the auditor's opinion about
the fair presentation of the operating results and financial position of the business. The
auditor's report also confirms that the financial information is prepared in conformity with
generally accepted accounting principles. The financial statements and the auditor's
report are made available to the public, including existing and potential stockholders.
An independent Accountant's review of a firm's financial statement
Business Transaction - ANSWER-A business transaction is any financial event that
changes the resources of a firm. For example, purchases, sales, payments, and
receipts of cash are all business transactions. The accountant analyzes each business
transaction to decide what information to record and where to record it.
When a business transaction occurs, it is analyzed to identify how it affects the equation
property equals financial interest.
To analyze the effect of a business transaction... - ANSWER-1) Describe the financial
event.
Identify the property.
Identify who owns the property.
Determine the amount of increase or decrease.
2) Make sure the equation is in balance.
Property = - ANSWER-Financial Interest
Equity/Capital - ANSWER-An owner's financial interest in the business is called equity,
or capital.
For example. Eli put 100,000 into his businesses bank account. Eli has 100,000 in
equity.
Buying an Account - ANSWER-An arrangement that allows payment at a later date.
Also called a charge-account or open-account credit
Accounts Payable - ANSWER-Amount a business must pay in the future.
Transaction - ANSWER-Any financial event that changes the resources firm
History of Accounting - ANSWER-The system of accounting we use is based upon the
works of Luca Pacioli, a Franciscan monk in Italy. In 1494, Pacioli wrote about the
bookkeeping techniques in practice during his time.
