Financial Accounting Ivy Software ACTUAL EXAM Questions and
CORRECT REVISED Answers.
Bookkeeping
identifying, measuring, and recording steps of the accounting process
Financial accounting
external
Managerial accounting
internal
Tax Accounting
governmental, help file tax returns
Tax accountants
difficult for them to keep up with new tax legislation passed every year
Accounting entity
non-profit, individual, or business; any organization for which separate accounting data is
gathered & processed
Proprietorship
one owner; not a legal entity; no legal distinction between business and owner; for accounting
purposes, there is a distinction
Partnership
2+ individuals; not a legal entity; no legal distinction between business and owner; for
accounting purposes, there is a distinction
Corporations
owned by many shareholders; are legal entities; continue to exist after owners death; owners
liable only for amount invested (LLC)
International Accounting Standards Board (IASB)
most important professional accounting organization
Financial Accounting Standards Board (FASB)
authoritative body of the US accounting profession; voice of the accounting principles (GAAP)
Securities & Exchange Commission (SEC)
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, regulates public corporations; requires public corporations to release financial reports (i.e., 10-K)
to the public every year
economic entity
one firm, one set of books
going concern
a firm has value beyond the liquidation value of its assets; entity will continue operations for the
foreseeable future
monetary concept
economic events must be measured in a common denominator
accounting period
periodic measures of economic performance and financial position; usually equal in length
matching
expenses incurred to generate revenues should be recognized during the same period as those
revenues
conservatism
it's better for potential measurement errors to understate rather than overstate PROFITS
understandibility
accounting information should be comprehensible to those who have a reasonable understanding
of business and economic activities
relevance
information that can make a difference to the decision at hand
reliability
information is free from error and bias and faithfully represents what it claims to represent
comparability
allows quantitative assessment of the similarities and differences among enterprise
consistency
unchanging accounting methods that allow information from the same firm to be compared over
time
materiality
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CORRECT REVISED Answers.
Bookkeeping
identifying, measuring, and recording steps of the accounting process
Financial accounting
external
Managerial accounting
internal
Tax Accounting
governmental, help file tax returns
Tax accountants
difficult for them to keep up with new tax legislation passed every year
Accounting entity
non-profit, individual, or business; any organization for which separate accounting data is
gathered & processed
Proprietorship
one owner; not a legal entity; no legal distinction between business and owner; for accounting
purposes, there is a distinction
Partnership
2+ individuals; not a legal entity; no legal distinction between business and owner; for
accounting purposes, there is a distinction
Corporations
owned by many shareholders; are legal entities; continue to exist after owners death; owners
liable only for amount invested (LLC)
International Accounting Standards Board (IASB)
most important professional accounting organization
Financial Accounting Standards Board (FASB)
authoritative body of the US accounting profession; voice of the accounting principles (GAAP)
Securities & Exchange Commission (SEC)
Page 1 of 12
, regulates public corporations; requires public corporations to release financial reports (i.e., 10-K)
to the public every year
economic entity
one firm, one set of books
going concern
a firm has value beyond the liquidation value of its assets; entity will continue operations for the
foreseeable future
monetary concept
economic events must be measured in a common denominator
accounting period
periodic measures of economic performance and financial position; usually equal in length
matching
expenses incurred to generate revenues should be recognized during the same period as those
revenues
conservatism
it's better for potential measurement errors to understate rather than overstate PROFITS
understandibility
accounting information should be comprehensible to those who have a reasonable understanding
of business and economic activities
relevance
information that can make a difference to the decision at hand
reliability
information is free from error and bias and faithfully represents what it claims to represent
comparability
allows quantitative assessment of the similarities and differences among enterprise
consistency
unchanging accounting methods that allow information from the same firm to be compared over
time
materiality
Page 2 of 12
