Accounting Information Systems

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Questions and Answers

What is the primary purpose of an accounting system?

To communicate reliable information to users

To record financial transactions

To provide reports to stakeholders about the economic activities and condition of a business (correct)

To identify business activities

Which type of accounting is concerned with the preparation of tax returns?

Cost and Management Accounting

Financial Accounting

Forensic Accounting

Taxation (correct)

What is the characteristic of reliable information in accounting?

It is relevant to its users

It is trusted by users (correct)

It is helpful in contrasting organizations

It affects the decision of its users

What is the role of the Malaysian Accounting Standards Board (MASB)?

To set both broad and specific accounting principles Signup and view all the answers

Who are the internal users of financial accounting information?

Managers, sales staff, and budget officers Signup and view all the answers

What is the purpose of financial statements?

To provide reports to stakeholders about the economic activities and condition of a business Signup and view all the answers

What is financial accounting concerned with?

Providing reports to stakeholders about the economic activities and condition of a business Signup and view all the answers

What is the characteristic of comparable information in accounting?

It is helpful in contrasting organizations Signup and view all the answers

Which principle ensures that accounting information is supported by independent, unbiased evidence?

Objectivity Principle Signup and view all the answers

What is the assumption underlying the Going-Concern Principle?

The business will continue operating indefinitely Signup and view all the answers

What is the purpose of the Monetary Unit Principle?

To express transactions in monetary units Signup and view all the answers

Which of the following is NOT a characteristic of revenue recognition?

Revenue is recognized when received in cash Signup and view all the answers

What is the primary function of the Business Entity Principle?

To separate business and owner's transactions Signup and view all the answers

What is the classification of Accounts Payable?

Short-term liability Signup and view all the answers

Which of the following is NOT a type of equity?

Dividends Signup and view all the answers

What is the accounting equation?

Assets = Liabilities + Equity Signup and view all the answers

Study Notes

Accounting System

Identifies, records, and communicates relevant and reliable information to help users make better decisions.
Provides reports to stakeholders about the economic activities and condition of a business.

Branches of Accounting

Auditing
Taxation
Forensic Accounting
Financial Accounting
Cost and Management Accounting
Public Sector Accounting

Financial Statements

Balance Sheet
Income Statement
Statement of Cash Flows

Users of Accounting Information

External Users: Lenders, Consumer Groups, Shareholders, External Auditors, Governments, Customers
Internal Users: Managers, Sales Staff, Officers, Budget Officers, Internal Auditors, Controllers

Accounting Principles and Rules

Generally Accepted Accounting Principles (GAAP) govern financial accounting practice.
Relevant Information: affects the decision of its users.
Reliable Information: is trusted by users.
Comparable Information: is helpful in contrasting organizations.
Malaysian Accounting Standards Board (MASB): sets both broad and specific principles.
Securities Commission of Bursa Malaysia: establishes reporting requirements for companies that issue shares to the public.

Accounting Principles

Objectivity Principle: accounting information is supported by independent, unbiased evidence.
Cost Principle: accounting information is based on actual cost.
Going-Concern Principle: reflects the assumption that the business will continue operating.
Monetary Unit Principle: express transactions and events in monetary units.
Revenue Recognition Principle:
- Recognize revenue when it is earned.
- Proceeds need not be in cash.
- Measure revenue by cash received plus cash value of items received.
Business Entity Principle: a business is accounted for separately from other business entities, including its owner.

Accounting Equation

Assets = Liabilities + Equity

Assets

Current Assets:
- Cash
- Accounts Receivable
- Notes Receivable
- Store Supplies
Fixed Assets:
- Land
- Buildings
- Equipment
- Vehicles

Liabilities and Equity

Short-term Liabilities: Accounts Payable, Bank Loan, Creditors' claims, Accrued Expenses
Long-term Liabilities: Bond, Debenture
Contributed Capital: Owner's claim on assets
Retained Earnings: Dividends

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Description

This quiz covers the basics of accounting information systems, including identifying, recording, and communicating relevant financial information to stakeholders.