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Questions and Answers
What significant event in accounting history took place in the 14th century?
What significant event in accounting history took place in the 14th century?
Who is often referred to as 'The Father of Accounting'?
Who is often referred to as 'The Father of Accounting'?
Which society was the first national accounting society in the U.S.?
Which society was the first national accounting society in the U.S.?
What does a merger result in?
What does a merger result in?
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Which numeral system was commonly used by Italians during the 14th to 16th centuries for tracking business accounts?
Which numeral system was commonly used by Italians during the 14th to 16th centuries for tracking business accounts?
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The accounting standards of the 20th century developed primarily around what requirement?
The accounting standards of the 20th century developed primarily around what requirement?
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Which of the following practices began to emerge due to the growth of multinational corporations?
Which of the following practices began to emerge due to the growth of multinational corporations?
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What was listed as one of the earliest forms of record-keeping?
What was listed as one of the earliest forms of record-keeping?
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During which revolution did the thorough study of accounting and the development of accounting theory begin?
During which revolution did the thorough study of accounting and the development of accounting theory begin?
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What was a significant outcome of the Industrial Revolution in terms of accounting?
What was a significant outcome of the Industrial Revolution in terms of accounting?
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What is the role of the Securities and Exchange Commission (SEC) in accounting?
What is the role of the Securities and Exchange Commission (SEC) in accounting?
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When did the modern, formal accounting profession emerge?
When did the modern, formal accounting profession emerge?
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Why is it important for accounting professionals to observe International Accounting Standards?
Why is it important for accounting professionals to observe International Accounting Standards?
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How was bookkeeping referred to in the Philippines during the Spanish colonization?
How was bookkeeping referred to in the Philippines during the Spanish colonization?
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What was a consequence of globalization on accounting that was mentioned?
What was a consequence of globalization on accounting that was mentioned?
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What characterizes the early part of the 20th Century in terms of accounting?
What characterizes the early part of the 20th Century in terms of accounting?
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What is a major disadvantage of a corporation?
What is a major disadvantage of a corporation?
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How are shareholders protected in a corporation?
How are shareholders protected in a corporation?
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What is a requirement for transferring ownership in a partnership?
What is a requirement for transferring ownership in a partnership?
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What aspect of a corporation allows for continuity despite a shareholder's incapacity?
What aspect of a corporation allows for continuity despite a shareholder's incapacity?
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What is the tax rate applicable to corporations as mentioned?
What is the tax rate applicable to corporations as mentioned?
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Which of the following is a characteristic of shareholder voting in a corporation?
Which of the following is a characteristic of shareholder voting in a corporation?
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Which of the following is a potential downside of business management in a corporation?
Which of the following is a potential downside of business management in a corporation?
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What regulatory authority oversees corporations as mentioned?
What regulatory authority oversees corporations as mentioned?
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What is the primary role of cost accountants in a manufacturing business?
What is the primary role of cost accountants in a manufacturing business?
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Which of the following is an example of sensitive information that cost accounting may handle?
Which of the following is an example of sensitive information that cost accounting may handle?
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How does managerial accounting facilitate pricing decisions?
How does managerial accounting facilitate pricing decisions?
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Who are considered internal users of accounting information?
Who are considered internal users of accounting information?
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What does accounting education focus on developing?
What does accounting education focus on developing?
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What is one function of cost accounting within a company?
What is one function of cost accounting within a company?
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What type of costs do cost accountants compare to inform managers?
What type of costs do cost accountants compare to inform managers?
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What area does managerial accounting NOT typically cover?
What area does managerial accounting NOT typically cover?
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What characterizes a service business?
What characterizes a service business?
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Which of the following is NOT a disadvantage of a merchandising (trading) business?
Which of the following is NOT a disadvantage of a merchandising (trading) business?
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What do manufacturing businesses primarily do?
What do manufacturing businesses primarily do?
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What is a primary advantage of operating a service business?
What is a primary advantage of operating a service business?
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Which type of business is best described by the phrase 'buy and sell'?
Which type of business is best described by the phrase 'buy and sell'?
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Which of the following is a disadvantage of service businesses?
Which of the following is a disadvantage of service businesses?
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What is one of the main disadvantages of the manufacturing type of business?
What is one of the main disadvantages of the manufacturing type of business?
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Which factor is essential for the success of service businesses?
Which factor is essential for the success of service businesses?
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What is one characteristic of limited liability in a corporation?
What is one characteristic of limited liability in a corporation?
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What is a benefit of a cooperative's structure compared to a corporation?
What is a benefit of a cooperative's structure compared to a corporation?
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What is an implication of the 'unlimited life' characteristic of a cooperative?
What is an implication of the 'unlimited life' characteristic of a cooperative?
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How does limited liability impact shareholders in a corporation?
How does limited liability impact shareholders in a corporation?
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What is a challenge faced by cooperatives in sustaining growth?
What is a challenge faced by cooperatives in sustaining growth?
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What happens to profits in a cooperative structure after expenses?
What happens to profits in a cooperative structure after expenses?
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What is a possible drawback of starting a cooperative compared to a corporation?
What is a possible drawback of starting a cooperative compared to a corporation?
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What aspect differentiates the management structure of cooperatives from corporations?
What aspect differentiates the management structure of cooperatives from corporations?
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Study Notes
Overview of Topics
- Accounting is the systematic recording, classifying, summarizing, and reporting of financial transactions.
- It's a service activity that communicates financial information useful for decision-making.
- Accounting is both an art and a discipline, requiring creativity and skill to meet specific objectives, along with adherence to standards and professional ethics.
- Branches of Accounting include financial accounting, management accounting, cost accounting, and government accounting.
Introduction to Accounting
- Accounting is used in business decisions to identify, record, and communicate financial information pertinent to various users.
- The learners cite examples of how accounting is applied in making business decisions.
Learning Competencies
- Accounting is defined as a service activity of identifying, recording, and communicating economic information that is financial in nature.
- The nature of accounting encompasses its features as a service activity, process, art, and discipline, and its concern with financial information.
- The function of accounting in business is to communicate business information to owners and stakeholders.
- Accounting's historical development is traced from record-keeping in ancient civilizations to the establishment of modern accounting standards.
History of Accounting
- Record-keeping developed in ancient civilizations, including Mesopotamia, China, and India, by the use of clay tablets.
- The 14th century marked the introduction of double-entry bookkeeping by Luca Pacioli.
- Progress was also made during economic developments like the French Revolution, the Industrial Revolution, and various milestones in the 19th and 20th centuries.
- This included the establishment of the Chartered Accountant profession in Scotland.
- The development of the accounting standards around the world took place through state requirements, to reflect the increasingly globalized business landscape.
Branches of Accounting
- Financial Accounting: focuses on external users' needs; deals with historical data, with results communicated through financial statements.
- Management Accounting: focuses on internal users' needs, provides information for decision-making by company managers.
- Cost Accounting: a subset of management accounting; records, presents, and analyzes manufacturing costs for better decision-making, especially for businesses involved in production or manufacturing.
- Government Accounting: focuses on the process of recording, analyzing, classifying, summarizing, communicating, and interpreting the financial information related to the government; deals with how tax revenues and government expenses are recorded.
- Auditing: external and internal auditing processes used to evaluate financial statements; external audits involve independent professionals while internal audits focus on internal control evaluation.
- Tax Accounting: involves tax planning, preparation of tax returns, tax advisory services, and determining the consequences of tax decisions.
Users of Accounting Information
- Internal Users: managers, employees, owners; need information for planning, organizing, and running daily operations. They evaluate things like profitability and efficiency.
- External Users: investors, creditors (banks, suppliers), government agencies, customers; need information to make decisions about investing, lending, and assessing risks. They evaluate things like the company's financial health and risk assessment.
Forms of Business Organizations
- Sole Proprietorship: simplest form, owned and run by one person, profits retained by the owner.
- Partnership: two or more persons, profits shared among partners, liability usually unlimited..
- Corporation: a separate legal entity, owned by shareholders. Profits are shared and distributed among shares. Owners' liability is limited to their investment, and existence is ongoing.
Types of Business According to Activities
- Service Businesses: provide services like repair, beauty parlors, or healthcare; don't create a tangible product.
- Merchandising Businesses: buy goods at wholesale and sell them at retail, profit from the price difference.
- Manufacturing Businesses: produce goods using raw materials, labor, and expenses, make products to be sold, generating a profit margin on the sale.
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Description
This quiz covers the fundamental concepts of accounting, including its definition, branches, and its role in business decision-making. Learners will explore how accounting serves as a vital tool for communicating financial information and adhering to ethical standards.
