Accounting 101 Midterm Exam 1 Questions And All Correct Answers.
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Course
Accounting 101
Institution
Accounting 101
Why is accounting important? - Answer It is the language of business.
Accounting is used by decision makers unclosing individuals, businesses, investors, creditors, and taxing authorities.
Accounting can be divided into two major fields; financial & managerial accounting.
Financial accounting...
Accounting 101 Midterm Exam 1
Questions And All Correct Answers.
Why is accounting important? - Answer It is the language of business.
Accounting is used by decision makers unclosing individuals, businesses, investors, creditors, and taxing
authorities.
Accounting can be divided into two major fields; financial & managerial accounting.
Financial accounting is used by external decision makers and managerial accounting is used by internal
decision makers.
All businesses need accountants. Accountants work in private, public, and governmental jobs.
Accountants can be licensed as either a certified public accountant ( CPA ) or certified management
accountant ( CMA )
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
Creditor - Answer Any person or business to whom a business owes money
Certified Public Accountants (CPAs) - Answer Licensed professional accountants who serve the general
public
Certified Management Accountants (CMAs) - Answer Certified professionals who specialize in
accounting and financial management knowledge. They typically work for a single company.
, Financial Accounting Standards Board (FASB) - Answer The private organization that oversees the
creation and governance of accounting standards in the US.
Securities and Exchange Commission (SEC) - Answer US government agency that oversees the US
financial markets
Generally Accepted Accounting Principles (GAAP) - Answer Accounting guidelines, currently formulated
by the FASB; the main US accounting rule book
Economic Entity Assumption - Answer An organization that stands apart as a separate economic unit.
Cost Principle - Answer A principle that states that acquired assets and services should be recorded at
their actual cost.
Sole Proprietorship - Answer A business with a single owner
Partnership - Answer A business with two or more owners and not organized as a corporation
Corporation - Answer A business organized under state law that is a separate legal entity
Limited- Liability Company ( LLC) - Answer A company in which each member is only liable for his or her
own actions
Going Concern Assumption - Answer Assumes that the entity will remain in operation for the
foreseeable future
Monetary Unit Assumptions - Answer The assumption that requires the items on the financial
statements to the measured in terms of a monetary unit
International Financial Reporting Standards (IFRS) - Answer A set of global accounting guidelines,
formulated by the IASB
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