Podcast
Questions and Answers
What type of business is a 'Review Center'?
What type of business is a 'Review Center'?
- Manufacturing
- Financial Institution
- Merchandising
- Service (correct)
Which of the following businesses fall under the category of 'Merchandising'?
Which of the following businesses fall under the category of 'Merchandising'?
- Siguion Reyna Law Firm
- Anson Vulcanizing
- National Book Store (correct)
- JM Furniture Factory
A business that provides hairdressing services is an example of what type of establishment?
A business that provides hairdressing services is an example of what type of establishment?
- Manufacturing
- Service (correct)
- Merchandising
- Financial Institution
Which business would be classified as a financial institution?
Which business would be classified as a financial institution?
What type of business is involved in the production of goods?
What type of business is involved in the production of goods?
What type of business is a 'Dental Clinic'?
What type of business is a 'Dental Clinic'?
What type of business is an 'Advertising Agency'?
What type of business is an 'Advertising Agency'?
Which of the following businesses would be classified as 'Manufacturing' ?
Which of the following businesses would be classified as 'Manufacturing' ?
What is the accounting principle that states that all material facts that will significantly affect the financial statements must be indicated?
What is the accounting principle that states that all material facts that will significantly affect the financial statements must be indicated?
Which accounting principle is violated when a company changes its accounting methods without proper explanation?
Which accounting principle is violated when a company changes its accounting methods without proper explanation?
Which accounting principle states that expenses should be recorded when they are incurred, regardless of when payment is made?
Which accounting principle states that expenses should be recorded when they are incurred, regardless of when payment is made?
Which of the following is NOT an example of an accounting principle?
Which of the following is NOT an example of an accounting principle?
According to the accounting principle of Materiality, what type of events or items are significant enough to influence the decisions made by a user of financial statements?
According to the accounting principle of Materiality, what type of events or items are significant enough to influence the decisions made by a user of financial statements?
Which user of the financial statements would primarily be interested in determining the company's capacity to pay its obligations and interests on time?
Which user of the financial statements would primarily be interested in determining the company's capacity to pay its obligations and interests on time?
Which of the following users of financial statements would be most interested in the job stability within a company?
Which of the following users of financial statements would be most interested in the job stability within a company?
Which accounting principle is primarily concerned with the proper recognition of revenue and expenses in the same accounting period?
Which accounting principle is primarily concerned with the proper recognition of revenue and expenses in the same accounting period?
What is the amount of owner's equity if the total liabilities amount to P580,000 which is ¼ of the total assets?
What is the amount of owner's equity if the total liabilities amount to P580,000 which is ¼ of the total assets?
What is the total amount of assets if the residual interest is 150% of the economic obligations of P480,000?
What is the total amount of assets if the residual interest is 150% of the economic obligations of P480,000?
What term represents the claim of the creditor's over the assets of the enterprise?
What term represents the claim of the creditor's over the assets of the enterprise?
Which of the following represents the basic accounting equation?
Which of the following represents the basic accounting equation?
Which of the following is considered an intangible asset?
Which of the following is considered an intangible asset?
What is the financial statement that shows the financial condition/position of a business as of a given period?
What is the financial statement that shows the financial condition/position of a business as of a given period?
Which of the following is NOT a typical component of the Statement of Financial Position?
Which of the following is NOT a typical component of the Statement of Financial Position?
What is the primary purpose of the Statement of Comprehensive Income?
What is the primary purpose of the Statement of Comprehensive Income?
Which financial statement provides information on the changes in a company's equity?
Which financial statement provides information on the changes in a company's equity?
What is the main purpose of the Statement of Cash Flows?
What is the main purpose of the Statement of Cash Flows?
What are the three types of business operations?
What are the three types of business operations?
Which of these is NOT a form of business organization?
Which of these is NOT a form of business organization?
What is the main distinction between assets and liabilities?
What is the main distinction between assets and liabilities?
Which of the following should be classified as an asset?
Which of the following should be classified as an asset?
Which of the following is classified as a liability?
Which of the following is classified as a liability?
What is a typical owner's equity account?
What is a typical owner's equity account?
Which of the following accounts would not be found on an income statement?
Which of the following accounts would not be found on an income statement?
If a company's economic resources amount to $600,000 and its obligations are $285,000, what is the residual interest?
If a company's economic resources amount to $600,000 and its obligations are $285,000, what is the residual interest?
Which of the following is usually not considered a current liability?
Which of the following is usually not considered a current liability?
What would Supplies Expense be classified as?
What would Supplies Expense be classified as?
Which item would normally increase owner's equity?
Which item would normally increase owner's equity?
What types of assets include items like tables, chairs, and lighting fixtures?
What types of assets include items like tables, chairs, and lighting fixtures?
Which of the following is an example of equipment?
Which of the following is an example of equipment?
Which of the following accounts represents amounts owed by charge customers?
Which of the following accounts represents amounts owed by charge customers?
What is classified as an intangible asset?
What is classified as an intangible asset?
Which of the following is NOT a criterion for classifying a liability as current?
Which of the following is NOT a criterion for classifying a liability as current?
Which asset account would represent a lot used by the business?
Which asset account would represent a lot used by the business?
What is an example of current liabilities?
What is an example of current liabilities?
Which of the following liabilities is primarily held for trading purposes?
Which of the following liabilities is primarily held for trading purposes?
Flashcards
Expense Accounting
Expense Accounting
Recording expenses like paper clips in business accounts.
Annual Reporting
Annual Reporting
Providing yearly updates to investors on project status.
Business Continuity Assumption
Business Continuity Assumption
Assuming a business will continue despite competition.
Down Payment in Business
Down Payment in Business
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Accrual Accounting
Accrual Accounting
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Separate Financial Statements
Separate Financial Statements
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Ignoring Market Value
Ignoring Market Value
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Business Activity Types
Business Activity Types
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Expense Recognition
Expense Recognition
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Advance Payment Liability
Advance Payment Liability
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Adequate Disclosure
Adequate Disclosure
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Historical Cost
Historical Cost
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Materiality
Materiality
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Consistency Principle
Consistency Principle
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Significance in Reporting
Significance in Reporting
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Footnote
Footnote
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Financial Statements
Financial Statements
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Balance Sheet
Balance Sheet
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Income Statement
Income Statement
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Statement of Changes in Owner's Equity
Statement of Changes in Owner's Equity
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Statement of Cash Flows
Statement of Cash Flows
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Assets
Assets
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Liabilities
Liabilities
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Owner's Equity
Owner's Equity
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Residual Interest
Residual Interest
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Accounting Equation
Accounting Equation
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Intangible Asset
Intangible Asset
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Accumulated Depreciation
Accumulated Depreciation
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Prepaid Rent
Prepaid Rent
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Unearned Rent
Unearned Rent
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Accrued Liabilities
Accrued Liabilities
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Equipment
Equipment
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Furniture and Fixtures
Furniture and Fixtures
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Current Liabilities
Current Liabilities
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Trading Purpose
Trading Purpose
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Non-current Liabilities
Non-current Liabilities
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Payables
Payables
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Goodwill
Goodwill
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Study Notes
Nature of Accounting and Business Environment
- Accounting is a systematic process of measuring and reporting relevant financial information about economic activities of an organization.
- It's expressed in monetary terms.
- Accounting is defined as the art of recording, classifying, and summarizing in a significant manner, and in terms of money, transactions and events of a financial character, and interpreting the results thereof.
- Accounting is a systematic process with four aspects: recording, classifying, summarizing, and interpreting - leading to financial information for users.
- It's a skill acquired through experience, study, or observation.
- Accounting is a service activity, serving a particular purpose by doing work.
Four Aspects of Accounting
- Recording: Chronologically writing down business transactions in accounting books.
- Classifying: Sorting similar transactions into assets, liabilities, and owner's equity.
- Summarizing: Preparing financial statements from recorded transactions to meet user needs.
- Interpreting: Representing qualitative and quantitative information in a comprehensible language, determining financial standing and stability.
Users of Financial Information
- Internal Users: Owners, investors, stockholders, management, and employees.
- Investors/Owners/Stockholders: Assess investment return.
- Management: Setting goals, evaluating performance, future actions.
- Employees: Future with the company's stability and growth potential.
- External Users: Financial institutions, creditors, government, and potential investors/creditors.
- Financial Institutions/Creditors: Assessing the organization's ability to pay obligations and interest.
- Government: Tax purposes and compliance with requirements (e.g., SEC).
- Potential Investors/Creditors: Assessing the organization's current financial standing and history to determine a reasonable return on investment or credit payment.
Types of Business Organizations
- Sole Proprietorship: Owned and managed by one person.
- Partnership: Owned and managed by two or more people contributing money, property, or industry.
- Corporation: Managed by a board of directors; investors (stockholders) owning shares.
- Cooperative: Voluntary association of small producers and consumers, jointly owning, managing, and patronizing a business.
Basic Accounting Principles
- Objectivity Principle: All transactions supported by verifiable evidence (e.g., receipts, deposit slips).
- Historical Cost: Recording assets at their original purchase price, not market value.
- Accrual Principle: Recognizing income when earned and expenses when incurred, not when cash is exchanged.
- Adequate Disclosure: Revealing all material facts influencing financial statements.
- Materiality: Focusing on information significantly affecting decisions, neglecting insignificant details.
- Consistency: Using the same accounting methods from period to period for comparison.
Fundamental Concepts
- Entity Concept: Business is separate from its owners.
- Periodicity Concept: Financial information is reported for specific time periods.
- Going Concern: Assumes a business will continue operating indefinitely.
Accounting for the Service Business
- Assets, Liabilities, Equities, Revenue, and Expenses: Are elements of financial statements that reveal a business' financial position and performance.
- Statement of Financial Position/Balance Sheet: Summarizes a company's financial position at a specific time, listing assets, liabilities, and equity.
- Statement of Comprehensive Income/Income Statement: Reports a company's financial performance over a period, showing revenue and expenses, including other comprehensive income.
- Statement of Changes in Owner's Equity: Tracks changes in owner's equity over a period, including additional investment, withdrawals, net income, or net loss.
- Statement of Cash Flows: Summarizes cash inflows and outflows for operating, investing, and financing activities.
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Description
Test your knowledge on different types of businesses with this quiz. Explore various categories such as merchandising, service establishments, and financial institutions. Challenge yourself to classify and understand the roles of different business types.
