Principles Of Accounting 1 (Exam 1)
Questions and Answers
Accounting - Answer-An information system that provides reports to stakeholders about
the economic activities and condition of a business.
Business Entity Concept - Answer-A concept of accounting that limits the economic
data in the accounting system to data related directly to the activities of the business.
generally accepted accounting principles (GAAP) - Answer-Generally accepted
guidelines for the preparation of financial statements. (In the USA)
Financial Accounting Standards Board (FASB) - Answer-The authoritative body that has
the primary responsibility for developing accounting principles. (Sets the rules for
GAAP)
Securities and Exchange Commission (SEC) - Answer-An agency of the U.S.
government that has authority over the accounting and financial disclosures for
companies whose shares of ownership (stock) are traded and sold to the public.
International Accounting Standards Board (IASB) - Answer-An organization that issues
International Financial Reporting Standards for many countries outside the United
States.
International Financial Reporting Standards (IFRS) - Answer-Emerged to reduce cross-
country differences in accounting standards, primarily in countries outside of North
America.
Matching Concept - Answer-A concept of accounting in which expenses are matched
with the revenue generated during a period by those expenses.
Cost Concept - Answer-A concept of accounting that determines the amount initially
entered into the accounting records for purchases.
Forms of Business Entities - Answer-Proprietorship, Partnership, Corporation, and
Limited Liability Company
Revenue Recognition Concept - Answer-The accounting concept that supports
reporting revenues when the services are provided to customers.
Accounting Equation - Answer-Assets= Liabilities + Owner's Equity
Assets - Answer-The resources owned by a business.
Questions and Answers
Accounting - Answer-An information system that provides reports to stakeholders about
the economic activities and condition of a business.
Business Entity Concept - Answer-A concept of accounting that limits the economic
data in the accounting system to data related directly to the activities of the business.
generally accepted accounting principles (GAAP) - Answer-Generally accepted
guidelines for the preparation of financial statements. (In the USA)
Financial Accounting Standards Board (FASB) - Answer-The authoritative body that has
the primary responsibility for developing accounting principles. (Sets the rules for
GAAP)
Securities and Exchange Commission (SEC) - Answer-An agency of the U.S.
government that has authority over the accounting and financial disclosures for
companies whose shares of ownership (stock) are traded and sold to the public.
International Accounting Standards Board (IASB) - Answer-An organization that issues
International Financial Reporting Standards for many countries outside the United
States.
International Financial Reporting Standards (IFRS) - Answer-Emerged to reduce cross-
country differences in accounting standards, primarily in countries outside of North
America.
Matching Concept - Answer-A concept of accounting in which expenses are matched
with the revenue generated during a period by those expenses.
Cost Concept - Answer-A concept of accounting that determines the amount initially
entered into the accounting records for purchases.
Forms of Business Entities - Answer-Proprietorship, Partnership, Corporation, and
Limited Liability Company
Revenue Recognition Concept - Answer-The accounting concept that supports
reporting revenues when the services are provided to customers.
Accounting Equation - Answer-Assets= Liabilities + Owner's Equity
Assets - Answer-The resources owned by a business.
