ACCOUNTING1

• Who is known as the father of accounting?

  Father Luca Bartolome de Pacioli
• What is the role of the American Accounting Association?


  Identifying, measuring, and communicating
• What does the Accounting Standard Council focus on?


  Service activity
• What are the main functions of the American Institute of Certified Public Accountants?

  Recording, classifying, and summarizing
• What are the three aspects of accounting as described in the nature of accounting?

  • Art: Skills and expertise
  • Process: Follows steps (AICPA)
  • Financial: Involves monetary transactions
• What is accounting often referred to as?

  The language of business
• How is business defined in the context of accounting?


  As an occupation, profession, or trade
• What is one of the sectors of accounting that involves government employees?

  Government
• What does public practice in accounting involve?

  Offering professional services like external audit
• What is the role of the academe in accounting?

  Teaching
• How do accountants in commerce and industry differ in their work?

  Their work varies depending on their positions
• What does RA 9298 pertain to in accounting?


  Ethics of accountants and board examination coverage
• Who are the primary users of financial statements?

  Parties to whom financial statements are primarily directed
• Who are considered internal users of financial statements?

  Members of the organizations
• Who are considered external users of financial statements?


  Parties outside the entity
• What are the types of users of financial statements?

  • Owners
  • Associations
  • Investors
  • Employees
  • Creditors
• What is a sole proprietorship?

  A business owned by one person that does not need to register with the SEC
• What are the advantages of a sole proprietorship?

  Less capital, easier to control, limited liability, and limited life
• What defines a partnership?

  A business owned by two to twenty persons based on trust
• What are the characteristics of a corporation?

  Created by law, limited liability, perpetual life, and difficulty of formation
• What is the difference between stock and non-stock corporations?

  Stock corporations have capital stock, while non-stock corporations do not
• Who are corporators?


  Individuals who compose the corporation
• Who are incorporators?


  Stockholders or members of the corporation
• What is a cooperative?


  A free and duly registered association of persons
• What are the types of businesses?

  • Service Business: Intangible products
  • Merchandising Business: Buy and sell
  • Manufacturing Business: Buy products to create new products
• What are the types of business activities?

  • Operating: Items from income statement, daily operation
  • Financing: How business is being funded
  • Investing: Activities capitalized over non-current assets
• What does relevance mean in accounting?

  The difference in the decisions made by users
• What is meant by faithful representation in accounting?

  Accurately showing everything
• What are the enhancing qualitative characteristics of accounting information?

  • Verifiability: Assures users of accuracy
  • Comparability: Similarities and differences
  • Understandability: Easily understood by users
  • Timeliness: Information provided at the right time
• What does materiality refer to in accounting?

  If the misstatement could influence economic decisions
• What is the measurement basis in accounting?

  To have a sense of uniformity
• What does offsetting mean in accounting?

  Classifying different items together, which is generally not appropriate
• What is aggregation in accounting?

  Adding of assets, liabilities, equity, income, and expenses
• What is the economic entity assumption in accounting?

  Owners should be treated separately from their financial transactions
• What is the cash basis of accounting?

  Income is recorded when received, and expenses are recorded when paid
• What is the accrual basis of accounting?

  Income and expenses are recorded when earned
• What is an asset?

  Present resources
• What is a liability?

  Present obligation
• What is equity in accounting?

  Remaining value in the asset
• What is income?


  Net increase in assets in a given accounting time