Exam (elaborations)
Chapter 1 Fundamental Financial Accounting Concepts
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Chapter 1 Fundamental Financial Accounting Concepts
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Chapter 1 Fundamental FinancialAccounting Concepts
Accounting ANS - An information system that reports on the economic activities and financial condition
of a business or other organization.
Market ANS - A group of people or entities organized to exchange items of value.
Investors ANS - Provide financial resources in exchange for ownership interests in businesses. Owners
expect businesses to return to them a share of the business including a portion of earned income.
Creditors ANS - Lend financial resources to businesses. Instead of a share of the business, _____ expect
the businesses to repay borrowed resources plus a specified fee called interest.
Assets ANS - Economic resource used to produce revenue which is expected to provide future benefit to
the business.
Liquidation ANS - Process of dividing up an organization's assets and returning them to the resource
providers. Creditors normally have first priority; after creditor claims have been satisfied, any remaining
assets are distributed to the company's owners (investors).
Physical Resources ANS - Natural resources businesses transform to create more valuable resources.
Labor Resources ANS - Both intellectual and physical efforts of individuals used in the process of
providing goods and services to customers.
Stakeholders ANS - Parties interested in the operations of a business, including owners, lenders,
employees, suppliers, customers, and government agencies.
Financial Accounting ANS - Branch of accounting focused on the business information needs of external
users (creditors, investors, governmental agencies, financial analysts, etc.); its objectives is to classify
, and record business events and transactions to produce external financial reports (income statement,
balance sheet, statement of cash flows, and statement of changes in equity).
Managerial Accounting ANS - The accounting information needed by internal users, stakeholders, such
as managers, and employees who work within a business is provided by _________ _________
Not-for-profit entities ANS - Organizations that are not motivated by profit.
Financial Accounting Standards Board ANS - A privately funded organization with the primary authority
for establishing accounting standards in the United States.
Generally Accepted Accounting Principles ANS - Rules and practices that accountants agree to follow in
financial reports prepared for public distribution.
International Accounting Standards Board ANS - Private, independent body that establishes
International Financial Reporting Standards (IFRS).
Financial Statements ANS - Business communicates through four _______ _______: Income Statements,
Statement of Changes in Equity, a Balance Sheet, and a statement of cash flow.
Elements ANS - The information reported in financial statements is organized into ten categories known
as _______.
Accounts ANS - Record of classified and summarized transaction data; component of financial
statement elements.
Liabilities ANS - The obligations a business has to its creditors.
Common Stock ANS - Basic class of corporate stock that has no preferential claim on assets or
dividends; certificates that evidence ownership in a company.
Stockholders ANS - In accounting terms investors are called ______.
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