Chapter 1 and 2:Accounting 12th
Edition Test Bank by Horngren's
Latest Edition.
Accounting - Answer The information system that measures business activities, processes the
information into reports, and communicates the results to decision makers.
Financial Accounting - Answer The field of accounting that focuses on providing information
for external decision makers.
Managerial Accounting - Answer The field of accounting that focuses on providing information
for internal decision makers.
Certified Management Accountants (CMAs) - Answer Certified professionals who specialize in
accounting and financial management knowledge. They typically work for a single company.
Certified Public Accountants (CPAs) - Answer Licensed professional accountants who serve the
general public.
Creditor - Answer Any person or business to whom a business owes money.
Corporation - Answer A business organized under state law that is a separate legal entity.
Economic Entity Assumption - Answer An organization that stands apart as a separate
economic unit.
Financial Accounting Standards Board (FASB) - Answer The private organization that oversees
the creation and governance of accounting standards in the United States.
Generally Accepted Accounting Principles (GAAP) - Answer Accounting guidelines, currently
formulated by the Financial Accounting Standards Board (FASB); the main U.S. accounting rule
book.
Limited-Liability Company (LLC) - Answer A company in which each member is only liable for
, Securities and Exchange Commission (SEC) - Answer U.S. governmental agency that oversees
the U.S. financial markets.
Sole Proprietorship - Answer A business with a single owner.
Cost Principle - Answer A principle that states that acquired assets and services should be
recorded at their actual cost.
Going Concern Assumption - Answer Assumes that the entity will remain in operation for the
foreseeable future.
Audit - Answer An examination of a company's financial statements and records.
International Accounting Standards Board (IASB) - Answer The private organization that
oversees the creation and governance of International Financial Reporting Standards (IFRS).
International Financial Reporting Standards (IFRS) - Answer A set of global accounting
guidelines, formulated by the International Accounting Standards Board (IASB).
Monetary Unit Assumption - Answer The assumption that requires the items on the financial
statements to be measured in terms of a monetary unit.
Sarbanes-Oxley Act (SOX) - Answer Requires companies to review internal control and take
responsibility for the accuracy and completeness of their financial reports.
Accounting Equation - Answer The basic tool of accounting, measuring the resources of the
business (what the business owns or has control of) and the claims to those resources (what the
business owes to creditors and to the owners). Assets = Liabilities + Equity.
Assets - Answer Economic resources that are expected to benefit the business in the future.
Something the business owns or has control of.
Equity - Answer The owners' claims to the assets of the business.
Edition Test Bank by Horngren's
Latest Edition.
Accounting - Answer The information system that measures business activities, processes the
information into reports, and communicates the results to decision makers.
Financial Accounting - Answer The field of accounting that focuses on providing information
for external decision makers.
Managerial Accounting - Answer The field of accounting that focuses on providing information
for internal decision makers.
Certified Management Accountants (CMAs) - Answer Certified professionals who specialize in
accounting and financial management knowledge. They typically work for a single company.
Certified Public Accountants (CPAs) - Answer Licensed professional accountants who serve the
general public.
Creditor - Answer Any person or business to whom a business owes money.
Corporation - Answer A business organized under state law that is a separate legal entity.
Economic Entity Assumption - Answer An organization that stands apart as a separate
economic unit.
Financial Accounting Standards Board (FASB) - Answer The private organization that oversees
the creation and governance of accounting standards in the United States.
Generally Accepted Accounting Principles (GAAP) - Answer Accounting guidelines, currently
formulated by the Financial Accounting Standards Board (FASB); the main U.S. accounting rule
book.
Limited-Liability Company (LLC) - Answer A company in which each member is only liable for
, Securities and Exchange Commission (SEC) - Answer U.S. governmental agency that oversees
the U.S. financial markets.
Sole Proprietorship - Answer A business with a single owner.
Cost Principle - Answer A principle that states that acquired assets and services should be
recorded at their actual cost.
Going Concern Assumption - Answer Assumes that the entity will remain in operation for the
foreseeable future.
Audit - Answer An examination of a company's financial statements and records.
International Accounting Standards Board (IASB) - Answer The private organization that
oversees the creation and governance of International Financial Reporting Standards (IFRS).
International Financial Reporting Standards (IFRS) - Answer A set of global accounting
guidelines, formulated by the International Accounting Standards Board (IASB).
Monetary Unit Assumption - Answer The assumption that requires the items on the financial
statements to be measured in terms of a monetary unit.
Sarbanes-Oxley Act (SOX) - Answer Requires companies to review internal control and take
responsibility for the accuracy and completeness of their financial reports.
Accounting Equation - Answer The basic tool of accounting, measuring the resources of the
business (what the business owns or has control of) and the claims to those resources (what the
business owes to creditors and to the owners). Assets = Liabilities + Equity.
Assets - Answer Economic resources that are expected to benefit the business in the future.
Something the business owns or has control of.
Equity - Answer The owners' claims to the assets of the business.
