Questions and Answers
What is the overall objective of accounting?
to provide quantitative financial information
Which of the following describes the informal era of accounting?
Who is known as the father of double-entry bookkeeping?
Amatino Manucci
The first form of bill of lading was used in 8500 B.C.
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What does the process of identifying in accounting involve?
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What significant component is associated with measuring in accounting?
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What is the overall objective of accounting?
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Which of the following components are involved in the accounting process?
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The informal era of accounting includes the use of clay tablets to track payments.
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Who is known as the father of double-entry bookkeeping?
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Luca Pacioli described double entry bookkeeping in his book called __________.
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What year introduced the submission of an annual fair value statement by the French government?
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Match the following historical accounting milestones with their respective descriptions:
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Study Notes
Overall Objective of Accounting
- Provides quantitative financial information about service entities.
- Involves recording, classifying, and summarizing economic data monetarily.
History Highlights
-
Informal Era:
- 8500 B.C.: Use of tokens sealed in clay balls (bullae) as the first form of bill of lading.
- 3600 B.C.: Clay tablets recorded wage payments and tracked labor costs.
- 2286-2242 B.C.: The Code of Hammurabi required merchants to provide buyers with sealed memoranda for transactions.
- 11th-14th Century A.D.: Inca civilization used quipu, knotted cords of varied lengths and colors, for accounting records.
-
Development Era:
- 1211: Earliest evidence of bookkeeping found in Florence, France.
- 1299-300: Amatino Manucci recorded financial details illustrating double-entry bookkeeping, recognized as its father.
- 1494: Luca Pacioli documented double-entry bookkeeping in his influential work, further promoting the Italian Method.
-
Formal Era:
- 1673: French government mandated annual fair value statements to safeguard the economy against bankruptcies, resulting in the Code Savary.
- 1975: Presidential Decree No. 692 replaced the 1923 accountancy law; PIPCA emerged as a professional organization for CPAs.
- 1981: Establishment of the Accounting Standards Council (ASC).
- 1987: Guidelines introduced for mandatory continuing professional education for accountants.
Components of Accounting
-
Identifying:
- Recognizes accountable events, including external transactions (between entities) and internal transactions (within an entity).
-
Measuring:
- Assigns monetary value to accountable transactions.
- Measurement can involve valuation by opinion (based on estimates) or by fact (objective value).
-
Communicating:
- Prepares and distributes financial reports and interprets the significance of the information.
Three Aspects of Accounting
-
Recording:
- Journalizing all economic transactions to maintain comprehensive records.
-
Classifying:
- Posting similar transactions in grouped records to facilitate analysis.
-
Summarizing:
- Preparing financial statements reflecting the organization's economic activities.
Overall Objective of Accounting
- Provides quantitative financial information about service entities.
- Involves recording, classifying, and summarizing economic data monetarily.
History Highlights
-
Informal Era:
- 8500 B.C.: Use of tokens sealed in clay balls (bullae) as the first form of bill of lading.
- 3600 B.C.: Clay tablets recorded wage payments and tracked labor costs.
- 2286-2242 B.C.: The Code of Hammurabi required merchants to provide buyers with sealed memoranda for transactions.
- 11th-14th Century A.D.: Inca civilization used quipu, knotted cords of varied lengths and colors, for accounting records.
-
Development Era:
- 1211: Earliest evidence of bookkeeping found in Florence, France.
- 1299-300: Amatino Manucci recorded financial details illustrating double-entry bookkeeping, recognized as its father.
- 1494: Luca Pacioli documented double-entry bookkeeping in his influential work, further promoting the Italian Method.
-
Formal Era:
- 1673: French government mandated annual fair value statements to safeguard the economy against bankruptcies, resulting in the Code Savary.
- 1975: Presidential Decree No. 692 replaced the 1923 accountancy law; PIPCA emerged as a professional organization for CPAs.
- 1981: Establishment of the Accounting Standards Council (ASC).
- 1987: Guidelines introduced for mandatory continuing professional education for accountants.
Components of Accounting
-
Identifying:
- Recognizes accountable events, including external transactions (between entities) and internal transactions (within an entity).
-
Measuring:
- Assigns monetary value to accountable transactions.
- Measurement can involve valuation by opinion (based on estimates) or by fact (objective value).
-
Communicating:
- Prepares and distributes financial reports and interprets the significance of the information.
Three Aspects of Accounting
-
Recording:
- Journalizing all economic transactions to maintain comprehensive records.
-
Classifying:
- Posting similar transactions in grouped records to facilitate analysis.
-
Summarizing:
- Preparing financial statements reflecting the organization's economic activities.
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Description
This quiz focuses on the basics of accounting as outlined in FAR 2. It covers important concepts such as the definition of accounting, its historical background, and the fundamental processes involved in financial reporting. Engage with this material to solidify your understanding of quantitative financial information.
