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Questions and Answers
What is the process of identifying, recording, and communicating economic information that is useful in making economic decisions?
Which of the following is not an appropriate description of accounting?
Which of the following accounting processes comes first ahead of the others?
What essential element of the definition of accounting involves the recognition or non-recognition of business activities as accountable events?
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What types of information are provided by accounting?
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Which professional organization defines accounting as a service activity?
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Which of the following is an internal user of financial information concerned mostly with the profits of the company?
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Which of the following is NOT a component of financial statements?
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Which term best defines the process of identifying, measuring, and communicating economic information to permit informed judgment and decision by users of the information?
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Who is considered as The Father of Accounting?
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How does the Accounting Standards Council define accounting?
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Which of the following is NOT an internal user of financial information?
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Which of the following is NOT an external user of financial information?
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What involves selecting economic events that are relevant to a specific business transaction?
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What involves keeping a chronological diary of events measured in pesos?
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What occurs through the preparation and distribution of financial and other accounting reports?
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Study Notes
Accounting Process
- Accounting is the process of identifying, recording, and communicating economic information that is useful in making economic decisions.
Characteristics of Accounting
- Accounting is not just about recording transactions or keeping a diary of events.
- Accounting involves the recognition or non-recognition of business activities as accountable events.
Types of Accounting Information
- Accounting provides two types of information: financial and non-financial.
Professional Organizations
- The American Institute of Certified Public Accountants (AICPA) defines accounting as a service activity.
Users of Financial Information
- Internal users: management, concerned with the profits of the company.
- External users: investors, creditors, and regulatory bodies.
Components of Financial Statements
- Financial statements consist of: Balance Sheet, Income Statement, and Cash Flow Statement.
- Note: Management's Discussion and Analysis (MD&A) is not a component of financial statements.
Definition of Accounting
- Accounting is the process of identifying, measuring, and communicating economic information to permit informed judgment and decision by users of the information.
- The Accounting Standards Council defines accounting as the process of identifying, recording, and communicating economic information.
Key Figures
- Luca Pacioli is considered the Father of Accounting.
Accounting Events
- Identifying economic events that are relevant to a specific business transaction is called transaction recognition.
Accounting Records
- Keeping a chronological diary of events measured in pesos is called journalizing.
Reporting
- Accounting information is communicated through the preparation and distribution of financial and other accounting reports.
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Description
Test your knowledge of accounting basics with this quiz. From identifying economic information to understanding the accounting processes, this quiz covers key concepts in the field.
