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Questions and Answers
What is the primary purpose of accounting?
What is the primary purpose of accounting?
Which entity is responsible for developing generally accepted accounting principles (GAAP)?
Which entity is responsible for developing generally accepted accounting principles (GAAP)?
What are International Financial Reporting Standards (IFRS) established by?
What are International Financial Reporting Standards (IFRS) established by?
Which of the following best describes a business transaction?
Which of the following best describes a business transaction?
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What role does the SEC play in accounting standards?
What role does the SEC play in accounting standards?
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What is one of the activities involved in the accounting process?
What is one of the activities involved in the accounting process?
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Why is it necessary for accounting reports to follow a set of standards?
Why is it necessary for accounting reports to follow a set of standards?
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How are business enterprises sometimes referred to?
How are business enterprises sometimes referred to?
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What is required to become a Certified Public Accountant (CPA)?
What is required to become a Certified Public Accountant (CPA)?
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What is the primary role of forensic accountants?
What is the primary role of forensic accountants?
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What certification must one obtain to be considered a Certified Management Accountant (CMA)?
What certification must one obtain to be considered a Certified Management Accountant (CMA)?
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What does internal auditing primarily focus on?
What does internal auditing primarily focus on?
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Which of the following entities typically employs not-for-profit accountants?
Which of the following entities typically employs not-for-profit accountants?
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What does the Sarbanes-Oxley Act aim to address?
What does the Sarbanes-Oxley Act aim to address?
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Which accounting category involves designing accounting systems and auditing financial statements?
Which accounting category involves designing accounting systems and auditing financial statements?
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What is a key responsibility of accountants in private businesses?
What is a key responsibility of accountants in private businesses?
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Ethics in accounting primarily refers to:
Ethics in accounting primarily refers to:
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What certification opportunity does the Institute of Internal Auditors offer?
What certification opportunity does the Institute of Internal Auditors offer?
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What is the primary role of a bookkeeper?
What is the primary role of a bookkeeper?
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Which of the following users of accounting information is most concerned with future earnings and debt repayment capabilities?
Which of the following users of accounting information is most concerned with future earnings and debt repayment capabilities?
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What is a key responsibility of an auditing clerk?
What is a key responsibility of an auditing clerk?
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Which career opportunity acts as a bridge between a general bookkeeper and a professional accountant?
Which career opportunity acts as a bridge between a general bookkeeper and a professional accountant?
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What minimum qualification is typically required for accounting clerk positions?
What minimum qualification is typically required for accounting clerk positions?
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What role does technology play in modern accounting practices?
What role does technology play in modern accounting practices?
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What is the expected job growth percentage for accounting-related jobs between 2014 and 2024?
What is the expected job growth percentage for accounting-related jobs between 2014 and 2024?
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What is one benefit of obtaining the Certified Bookkeeper designation?
What is one benefit of obtaining the Certified Bookkeeper designation?
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Which of the following best describes the role of an accountant in a business?
Which of the following best describes the role of an accountant in a business?
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What is the minimum educational requirement often preferred for auditing clerks?
What is the minimum educational requirement often preferred for auditing clerks?
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What type of information do government agencies verify from companies?
What type of information do government agencies verify from companies?
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Which characteristic distinguishes a general bookkeeper from an accounting clerk?
Which characteristic distinguishes a general bookkeeper from an accounting clerk?
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What is a key skill essential for all accounting positions today?
What is a key skill essential for all accounting positions today?
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Study Notes
Introduction to Accounting
- Accounting is the language of business, used by various stakeholders to describe business events.
- It involves analyzing, classifying, recording, summarizing, and interpreting business transactions in monetary terms.
- A business transaction is an event that affects the business, expressed in money, and recorded.
- Accounting aims to provide financial information for efficient economic unit operation.
What is Accounting?
- Economic activities form the basis of accounting.
- Accountants analyze these activities, using critical thinking and judgments, to identify needed information for sound decisions.
- Accounting serves not only businesses but also non-profits like governments, churches, clubs, and charities.
Accounting Standards
- Generally Accepted Accounting Principles (GAAP) provide rules for the accounting process, developed by the Financial Accounting Standards Board (FASB).
- The Securities and Exchange Commission (SEC) regulates publicly traded companies and relies on the FASB for accounting standards.
- International Financial Reporting Standards (IFRS), developed by the International Accounting Standards Board (IASB), are gaining prominence globally and are converging with GAAP.
Bookkeeping and Accounting
- Bookkeeping involves the systematic recording of business transactions.
- Accounting is broader, encompassing system design, supervision, and financial statement/tax report preparation.
Importance of Accounting Information
- Accounting knowledge is essential for leadership roles in business and government.
- Understanding accounting's scope, functions, and organizational policies is gained through study.
Users of Accounting Information
- Owners: Seek information on earnings, future prospects, and debt repayment ability.
- Managers: Need accounting data for reports, budgets, and performance evaluation.
- Creditors: Demand information on the company's ability to repay debts. This includes suppliers, banks, and loan companies
- Government Agencies: Review company information for various taxes (income, sales, employment). Public utilities provide data to regulatory agencies.
Accounting and Technology
- Computers are essential for all businesses, large and small.
- Accounting roles require computer proficiency (word processing, spreadsheets, accounting software like QuickBooks).
Career Opportunities in Accounting
- Accounting employment is projected to grow faster than average.
- Growth of 11% is anticipated between 2014 and 2024.
Accounting Clerk/Technician
- Routine recording of financial data is their primary task.
- Duties vary by company size (small businesses handle more tasks, larger companies employ clerks for specific portions of the accounting system).
- Usually requires a term or semester in accounting.
Auditing Clerk
- Primary role: verifying transactions and records.
- Responsibilities also include updating records, ensuring mathematical accuracy, noting/correcting errors for accountants.
- High school diploma is usually the minimum requirement; an associate degree in business or accounting is often preferred.
General Bookkeeper
- Oversees bookkeeping operations in smaller and medium-sized businesses.
- Supervises accounting clerks.
- Requirements vary by company, typically including one or two years of accounting education and clerk experience.
Paraprofessional Accountant
- Bridges the gap between general bookkeepers and professional accountants.
- Manages general bookkeeper responsibilities and some professional accountant duties.
- Typically requires a two-year degree, accounting software knowledge, and experience.
Certifications Available
- Several organizations offer certifications:
- Certified Bookkeeper (CB) from the American Institute of Professional Bookkeepers.
- Accredited Business Accountant® (ABA) from the Accreditation Council for Accountancy and Taxation.
Accountant
- Designs and manages accounting systems.
- Prepares financial statements, tax returns, and conducts audits.
- Many start at entry-level positions and advance.
- Four categories: public, managerial/private, government/non-profit, and internal auditing.
Public Accounting
- Often CPAs (certified public accountants).
- Requirements include a bachelor's degree, 150+ credit hours (most states), passing an exam, and work experience.
- Services include: system design, tax returns, financial advice, audits, and financial positions (CFO, controller, financial analyst).
- Forensic accounting involves investigations of business crimes (fraud, embezzlement, money laundering).
Managerial or Private Accounting
- Works for private companies.
- Manages systems, prepares budgets, determines costs, provides financial information for management.
- Opportunities for advancement to top management.
- Certified Management Accountant (CMA): has skills in financial and decision-making analysis & ethics.
- Requires a bachelor's degree, passing the CMA exam, and two years' relevant experience.
Government and Not-for-Profit Accounting
- Applies to government bodies, hospitals, churches, schools.
- Activities include budgeting, revenue/expense recording.
Internal Auditing
- Verifies system effectiveness and controls.
- Ensures accurate financial information, protects it, ensures compliance with government regulations and corporate policies.
- Certified Internal Auditor (CIA) certification from the Institute of Internal Auditors.
- Requires a bachelor's degree, two years' experience, and passing the CIA exam.
Ethics
- Accounting ethics involves conduct according to laws and personal moral code.
- Organizations provide codes of ethics.
- Sarbanes-Oxley Act (SOX) was enacted to address corporate accounting scandals like Enron and WorldCom and set new rules.
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Description
This quiz covers the fundamentals of accounting, including its definition, importance, and the role it plays in business and non-profit organizations. You'll explore key concepts such as accounting standards and the principles that guide financial reporting.
