Accounting Vocabulary Quiz

Study Notes

Vocabulary

Income: Money earned by an individual or entity from various sources.
Profit: Financial gain received by a company after deducting expenses.
Fiscal Period: Defined periods for accounting activities, such as monthly or yearly reporting.
GAAP: Generally Accepted Accounting Principles, a framework for financial reporting.
IFRS: International Financial Reporting Standards, used globally for consistency in accounting. Compliance with both IFRS and GAAP is required in Canada.
CICA: Canadian Institute of Chartered Accountants, a professional body governing accountants in Canada.

Accounting Overview

Definition: System for managing financial data, aiding in decision-making processes.
Main Activities:
- Gathering financial information about business activities.
- Maintaining permanent records for evidential purposes.
- Summarizing and classifying financial data for usability.
- Preparing reports for management and external stakeholders.
- Establishing controls to ensure accuracy and integrity among employees.

Importance of Studying Accounting

Answers key business questions regarding profitability, pricing, liabilities, and inventory.
Enhances employment prospects as numerous jobs require accounting skills.

Accounting in Daily Life

Knowledge of accounting facilitates understanding business concepts, enabling better personal financial management such as budgeting and tax preparation.

Owning a Business

Accounting skills help manage:
- Banking and customer debts.
- Supplier obligations.
- Government record-keeping.
- Financial reporting for tax purposes.
- Payroll preparation and deductions.

Accounting as a Profession

Accountants may belong to at least one of these organizations in Canada:
- Chartered Accountants (CA).
- Certified General Accountants (CGA).
- Certified Management Accountants (CMA).
Public Accountants: Serve clients for fees, often conducting audits and providing tax advice.
Types of Accounting:
- Management Accounting: For large corporations.
- Institutional Accounting: For government and public institutions.

Complexity of Business

Businesses navigate various laws for practices and taxes, often requiring professional accountants for compliance and advice.

Types of Businesses

Service Business: Provides services to consumers (e.g., salons, clinics).
Merchandising Business: Buys and resells goods for profit (e.g., retail stores).
Manufacturing Business: Produces new products from raw materials (e.g., farms).
Non-Profit Organization: Operates to meet social needs without profit motives.

Forms of Business Ownership

Sole Proprietorship: Single-owner structure.
Partnership: Multiple owners sharing responsibilities.
Limited Company/Corporation: Owned by shareholders, offering limited liability protection.

Father of Accounting

Luca Pacioli: Renowned Italian mathematician recognized for developing the double-entry accounting system.

Categories of Accounting Work

Routine Daily Activities: Include consistent processes such as billing, cheque preparation, daily banking, and transaction recording.
Periodic Accounting Activities: Involve specific tasks occurring at intervals, such as monthly or annual reporting.

Description

Test your knowledge of essential accounting terms and definitions with this quiz. Covering topics such as income, profit, fiscal periods, and various accounting principles, it's designed for students and professionals alike. Challenge yourself and enhance your understanding of fundamental concepts in accounting.