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Accounting Essentials

98 cards · 🇺🇸 English

What accounting is, its main fields, and bookkeeping basics.

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Accounting

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1Accounting
The process of recording and processing information about economic entities, measuring results of economic activities and conveying this to stakeholders
2Another name for accounting
Accountancy
3Practitioners of accounting known as
Accountants
4Main fields of accounting
Financial accounting, management accounting, tax accounting, and cost accounting
5Financial accounting
Reporting of an organization's financial information, including financial statements, to external users like investors, regulators, and suppliers
6Management accounting
Measurement, analysis and reporting of information for internal use by management to enhance business operations
7Bookkeeping
The recording of financial transactions so that summaries may be presented in financial reports
8Most common bookkeeping system
Double-entry bookkeeping
9Luca Pacioli known as
The "Father of Accounting"
10First published work on double-entry bookkeeping
Summa de arithmetica, published in Italy in 1494 by Luca Pacioli
11GAAP
Generally Accepted Accounting Principles
12What organization sets GAAP in the United States?
Financial Accounting Standards Board (FASB)
13IFRS
International Financial Reporting Standards
14Which organization issues IFRS?
International Accounting Standards Board (IASB)
15Where is one early development of accounting traced to?
Ancient Mesopotamia, closely related to developments in writing, counting and money
16Which ancient civilizations had early auditing systems?
Ancient Egyptians and Babylonians
17Etymology of "accounting
From Middle English "accounten," derived from Old French "aconter," related to Vulgar Latin "computare" (to reckon)
18Computare
To reckon, count, or calculate
19Financial reporting
A term often used interchangeably with accounting, referring to the communication of financial information
20Financial statements
Formal records of the financial activities and position of a business, person, or entity
21What time orientation do financial accounting reports typically have?
Past-oriented, often published 6-10 months after the accounting period, on an annual or quarterly basis
22Does management accounting follow GAAP?
No, management accounting reports are based on cost-benefit analysis and not required to follow GAAP
23Global Management Accounting Principles (GMAPs)
Principles created by CIMA in 2014 from research across 20 countries to guide best practice in management accounting
24Do management accounting reports include only financial information?
No, they often include both financial and non-financial information and may focus on specific products and departments
25Intercompany accounting
Measurement, analysis and reporting between related entities like a parent company and its subsidiaries
26Auditing
The unbiased examination and evaluation of the financial statements of an organization
27An audit of financial statements aim to
Express or disclaim an independent opinion on the fairness of financial statements in accordance with GAAP
28Accounting information system
Part of an organization's information system used for processing accounting data
29How is AI used in banking and finance?
In fraud detection
30Enterprise resource planning (ERP) system
A comprehensive, centralized, integrated system to manage all major business processes from purchasing to manufacturing to HR