AIS - Exam 1 (Chapter 2) Latest 2023 Rated A

AIS - Exam 1 (Chapter 2) Latest 2023 Rated A Accounting Bookkeeping is typically done before accounting, the process of identifying, measuring, and communicating economic decisions to permit informed judgments Bookkeeping A part of accounting that involves only the recording of economic events Not guaranteed success in the accounting profession The accounting cycle the process by which companies produce their financial statements for a specific period 10 steps? External vs internal transactions External transactions are exchanges of goods and services. Through the use of source documents (paper based or electronic) Internal transactions are adjusting entires, closing entries, and reversing entries Expanded Accounting Equation Assets = Liabilities + Equity + Revenue - Expense Helps with principles of debit and credit General-purpose financial statements Income statement, Stockholders equity, balance sheet, and statement of cash flows Sequential coding Assigns numbers to objects in chronological sequence, also a method of internal controls Block coding Chart of accounts, numbers assigned in blocks; each block is reserved for a particular kind of account. Hierarchical codes More sophisticated than block coding, digit/block of digits conveys important information to people who know the code. Mnemonic codes Universities typically use this. Help people remember the name of the code. Example: DVR human judgement Designing source documents, recognizing recordable transactions, estimating amounts and interpreting accounting rules, and estimating amounts and interpreting accounting rules Information technology is used for a variety of tasks in the accounting cycle Internal controls with the accounting cycle Includes numbered documents, physical security, physical security, transaction limits, debits and credits equaling, trial balances, and audits Which of the following best explains the relationship between bookkeeping and accounting? a. bookkeeping is one activity involved in accounting b. accounting is one activity involved in bookkeeping c. bookkeeping and accounting are two terms for the same thing d. bookkeeping never involves human judgment, while accounting always does a. bookkeeping is one activity involved in accounting How many trial balances are commonly prepared as part of the 10 steps of the accounting cycle? a. one b. two c. three d. more than three c. three Which of the following is the best example of an accrued revenue? a. interest earned but not received on a note receivable b. interest received but not earned on a note receivable c. sales on account d. purchases on account a. interest earned but not received on a note receivable All of the following chart of accounts coding systems typically use numbers except: a. block c. hierarchical c. mnemonic d. sequential c. mnemonic Human judgment can be involved in the AIS via: a. designing source documents b. recognizing recordable transactions c. estimating amounts d. All of the above d. all of the above