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JCCC Accounting Week 1 Test Questions and Answers
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JCCC Accounting Week 1 Test Questions and Answers
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JCCC Accounting Week 1 TestQuestions and Answers
Accounting - Answer-an information and measurement system that identifies, records
and communicates relevant, reliable and comparable information about an
organization's business activities
Recordkeeping/Bookkeeping - Answer-the recording of transactions and events, either
manually or electronically
External users - Answer-not directly involved in organization, lenders, shareholders,
governments, consumer groups, external auditors, customers
Financial accounting - Answer-the area of accounting aimed at serving external users
by providing them with general-purpose financial statements
Internal users - Answer-those directly involved in managing and operating an
organization, officers, managers, internal auditors, sales staff, budget officers,
controllers
Managerial accounting - Answer-the area of accounting that serves the decision-making
needs of internal users
Ethics - Answer-beliefs that distinguish right from wrong, accepted standards of good
and bad behavior
GAAP - Answer-generally accepted accounting principles
Securities and Exchange Commission (SEC) - Answer-government agency with
authority to set GAAP, oversees proper use of GAAP by companies that raise money
from the public through issuances of their stock and debt
Financial Accounting Standards Board (FASB) - Answer-a private-sector group that sets
both broad and specific principles
International Accounting Standards Board (IASB) - Answer-independent group
consisting of individuals from many countries that issues International Financial
Reporting Standards (IFRS) that identify preferred accounting practices
Conceptual framework - Answer-objectives (to provide information useful to investors,r
creditors and others), qualitative characteristics (to require information that is relevant,
reliable, and comparable), elements (to define terms that financial statements can
contain), recognition and measurement (to set criteria than an item must meet for it to
be recognized as an element; and how to measure that element
, General principles - Answer-basic assumptions, concepts and and guidelines for
preparing financial statements
Specific principles - Answer-detailed rules used in reporting business transactions and
events
measurement principles or cost principle - Answer-prescribes that accounting
information is based on actual cost
revenue recognition principle - Answer-provides guidance on when a company must
recognize revenue, (1) Revenue is recognized when earned, (2) Proceeds from selling
products and services need not be in cash, (3) Revenue is measured by the cash
received plus the cash value of any other items received
expense recognition principle or matching principle - Answer-prescribes that a company
record the expenses it incurred to generate the revenue reported
full disclosure principle - Answer-prescribes that a company report the details behind
financial statements that would impact users' decision
going concern assumption - Answer-accounting information reflects a presumption that
the business will continue operating instead of being closed or sold
monetary unit assumption - Answer-we can express transactions and events in
monetary or money, units
timed period assumption - Answer-presumes that life of a company can be divided into
time periods, such as months and years, and that useful reports can be prepared for
those time periods
business entity assumption - Answer-a business is accounted for separately from other
business entities including its owner
sole proprietorship or proprietorship - Answer-a business owned by one person,
business is separate entity for accounting purposes, business is not a separate legal
entity from its owner, not subject to business income taxed, on owners personal income
tax return
partnership - Answer-owned by two or more people who are jointly liable for tax and
other obligations, no special legal requirements must be met in starting partnership,
agreement required between partners to run business together, not legally separate
from owners, unlimited liability, profits reported and taxed on owners' taxes
limited partnership (LP) - Answer-includes a general partner(s) with unlimited liability
and a limited partner(s) with a liability restricted to the amount invested
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