A set of rules and standards used in financial accounting to ensure consistency and transparency in financial reporting.
The principle that a business's financial activities must be kept separate from the personal financial activities of its owners.
The assumption that a business will continue to operate indefinitely, unless there is evidence to the contrary.
Internal Users include individuals within the organization such as owners, managers, and employees who use accounting information for planning, monitoring, and decision-making.
Accounting provides valuable information that helps management make informed decisions and strategize effectively.
Tax accounting involves planning for tax time and the preparation of tax returns, aiding businesses in compliance with IRS regulations, determining income tax and other taxes, and analyzing tax-related business decisions.
Fiduciary accounting is a branch of accounting that centers around the management of property for another person or business, covering estate accounting, trust accounting, and receivership.
Managers use accounting information to plan, monitor, and make business decisions, as well as to allocate financial, human, and capital resources through the budgeting process.
The management requires the most detailed financial information to make informed decisions regarding the operations and strategy of the organization.
The Monetary Principle assumes that money is a stable unit of value over time, although this assumption is unrealistic as money loses its value over time.
Financial accounting involves recording and categorizing transactions for a business, generating financial statements based on historical data, and conforming to generally accepted accounting principles (GAAP).
The purpose of preparing a trial balance is to ensure that the total debits equal the total credits, verifying the accuracy of the bookkeeping.
Users of accounting information include tax authorities, investors, and creditors.
Financial transactions are any events that involve the exchange of money or financial assets, affecting the financial position of a business.
The Matching Principle states that the measurement of an expense occurs in two phases: first, measuring the cost of goods and services consumed in generating revenue, and second, matching that cost with revenue to determine when the cost becomes an expense.
Book Keeping is the systematic recording, storing, and retrieving of financial transactions for a business, ensuring accurate financial reporting and compliance with regulations.
The purpose of accounting is to provide information to managers, give quantitative information to economic decision makers, and serve as a provision for decision making.
Owners need to assess how well their business is performing, and financial statements provide them with information about the profitability of the overall business and individual products.
Users of financial information include internal parties like owners, managers, and employees, as well as external parties such as investors, lenders, suppliers, customers, tax authorities, government, auditors, and the public.
The scope of accounting includes keeping systematic records, ascertaining profitability, ascertaining financial position, and assisting in decision making, but does not typically include considering qualitative elements.
The government defines and monitors accounting thresholds such as sales revenue and net profit to determine the size of each business for compliance with employee, consumer, and safety regulations.
Accounting is the overall process of financial information management, while accountancy refers specifically to the profession and practice of accounting.
The Time Period Principle states that financial statements are prepared for specific relatively brief accounting periods, typically one year, to assist in decision making and for tax purposes.
The scope of accounting encompasses the recording, classification, summarization, and interpretation of financial transactions and information, aimed at providing useful financial data to stakeholders for decision-making.
According to AAA, accounting is the process of identifying, measuring, and communicating economic information to permit informed judgments and decisions by users of the information.
Users of Financial Information include internal parties like owners, managers, and employees, as well as external parties such as investors, lenders, suppliers, customers, tax authorities, government, auditors, and the public.
Fiduciary Accounting is the branch of accounting that deals with the management of assets held in trust or on behalf of another party, including estate accounting.
Generally Accepted Accounting Principles, a set of rules and standards for financial reporting.
Users of financial information include internal parties like owners, managers, and employees, as well as external parties such as investors, lenders, suppliers, customers, tax authorities, government, auditors, and the public.
The Historical Cost Principle involves valuing assets at the original cost of acquiring them, while considering adjustments for price level changes using price level indices.
The Consistency Principle requires that a particular accounting technique not be changed from period to period, facilitating comparison of financial statements over time.
A method of accounting where revenues and expenses are recorded when they are earned or incurred, regardless of when cash is exchanged.
Users of financial information include internal parties like owners and managers, as well as external parties such as investors, lenders, suppliers, customers, tax authorities, government, auditors, and the public.
Investors use accounting information to determine whether an investment is a good fit for their portfolio and whether they should hold, increase, or decrease their investment.
Cost Accounting deals with the calculation of per unit cost of products or services, helping in budgeting and cost control.
The Objectivity Principle requires unbiased verifiable measurements, where the accountant seeks the most objective evidence available to support financial statements, including invoices, cancelled checks, bank statements, inventory counts, deeds, and contracts.
Internal users include individuals within the organization such as owners, managers, and employees who use financial information for decision-making.
The art of keeping permanent record of business transactions.
Accountancy refers to the profession or practice of accounting, encompassing the principles and procedures used in financial reporting.
Also known as management accounting, this type of accounting provides data about a company’s operations to managers, focusing on the information needed for decision-making rather than strict compliance with GAAP.
Credit transactions are money worth transactions that are recorded in the bookkeeping process.
Book-keeping is the science and art of correctly recording in the books of accounts, all those business transactions that result in transfer of money’s worth.
The correct order is Journalizing, posting to the ledger, trial balance, and final accounts.
Users of Financial Information include internal parties like owners, managers, and employees, as well as external parties such as investors, lenders, suppliers, customers, tax authorities, government, auditors, and the public.
Investors primarily rely on the financial statements published by companies to assess the profitability, valuation, and risk of their investment.
It is the art of recording business transactions.
External auditors are independent professionals who examine the financial statements and underlying accounting records of businesses to form an audit opinion.
Management requires accounting information to monitor business performance by comparing it against past performance, conducting competitor analysis, and evaluating key performance indicators and industry benchmarks.
Accounting information helps owners assess the stability of their business over the years and understand how economic factors have impacted their bottom line.
External users include individuals or entities outside the organization, such as investors, lenders, suppliers, customers, tax authorities, government, auditors, and the public, who use financial information for various purposes.
It is the art of summarizing financial transactions.
The Full Disclosure Principle requires that all relevant facts concerning the financial position of a business be presented in the financial statements, including significant events occurring after the end of the fiscal period but before the release of the financial statements.
The Monetary Principle states that money is the basic unit of measurement for financial reporting, providing a common denominator for adding and subtracting heterogeneous transactions.
The accrual concept of accounting states that financial or business transactions are recorded when the transaction occurs, regardless of when cash is received or paid.
Users of financial information include internal parties like owners, managers, and employees, as well as external parties such as investors, lenders, suppliers, customers, tax authorities, government, auditors, and the public.
Risk Accounting is not recognized as a distinct branch of accounting, unlike Managerial Accounting, Forensic Accounting, and Fiduciary Accounting.
Bookkeeping involves the daily recording of financial transactions such as sales, purchases, receipts, and payments.
The preparation of ledger accounts involves organizing and summarizing all transactions related to specific accounts.
Accrual basis of accounting is a method of accounting in which transactions are recorded on the basis of the period in which they happen or accrue.
Receivership is the appointing of a custodian of a business’s assets during events such as bankruptcy.
Users of financial information include internal parties like owners, managers, and employees, as well as external parties such as investors, lenders, suppliers, customers, tax authorities, government, auditors, and the public.
GAAP are a set of rules and standards that financial statements must adhere to, ensuring consistency and transparency in financial reporting.
Accounting aims to ascertain profitability by measuring the income generated relative to expenses incurred over a specific period.
Management might change accounting methods when the change serves the needs of the users of the statement, such as switching from linear to sum of years digit method for depreciation.
Management Accounting deals with decision making and provides information to managers for planning, controlling, and evaluating operations.
Bookkeeping is the recording of financial transactions and is a subset of accounting.
It is the art of recording business transactions.
Users of financial information include internal parties like owners, managers, and employees, as well as external parties such as investors, lenders, suppliers, customers, tax authorities, government, auditors, and the public.
Cash Basis accounting is the method of accounting that recognizes revenue when money is received and expenses when bills are paid.
Accounting tracks and records asset transactions, ensuring that assets are managed and safeguarded properly.
Financial statements provide information to owners about the profitability of the overall business as well as individual products and geographic segments.
Suppliers need accounting information to assess the credit-worthiness of their customers before offering goods and services on credit.
Forensic accountants usually work as consultants on a project basis.
Adjustments for price level changes are made using price level indices, such as prescription price indices.
A limitation of the Monetary Principle is that not all things of value to the organization can be measured in monetary terms.
A fiscal year is the year chosen for financial measurement, which does not necessarily correspond to the calendar year but aligns with the natural cycle of business activity.
Accounting refers to the actual process of preparing and presenting the accounts, essentially the art of applying the academic knowledge of accountancy into practice.
Classifying refers to the process of organizing financial data into categories for better analysis.
The materiality of an item depends not only on the amount but also on the nature of the item, such as whether a purchase is classified as an expense or an asset.
Accounting ignores qualitative elements, focusing primarily on quantitative data.
The Conservatism Principle requires the selection of accounting methods that neither overstate nor understate the facts, favoring options that produce lower net income and a less favorable financial position in the face of uncertainty.
Accounting ensures that organizations adhere to laws and regulations, reducing the risk of legal issues.
For financial statements to present fairly means that they accurately reflect the financial position and results of operations of the entity, adhering to the relevant accounting principles.
The Realization Principle is fundamental in the accrual basis of accounting and states that revenue is recognized when it is realized, meaning when the earning process is complete and objective evidence exists as to the amount of revenue earned.
Accounting is the systematic process of recording, measuring, and communicating financial information about an entity.
Accounting is defined as the art of recording, classifying, and summarizing in a significant manner in terms of money transactions and events which are at least partially of a financial character, and interpreting the results thereof.
GAAP are guidelines determined primarily by the Financial Accounting Standard Board (FASB) and its predecessor, the Accounting Principles Board (APB), providing a general framework for determining what information is included in financial statements and how it is prepared and presented.
Users of financial information include internal parties like owners and managers, as well as external parties such as investors, lenders, suppliers, customers, tax authorities, government, auditors, and the public.
An Independent CPA Opinion is a statement that includes comments on any unusual factors in the financial position and assesses the fairness of the presentation of financial statements.
Full disclosure can be accomplished either in the body of a financial statement or in its footnotes.
Disadvantages of accounting include the potential for errors in financial statements, the complexity of accounting standards, the cost of maintaining accounting systems, and the time-consuming nature of record-keeping.
Identifying accounting transactions involves recognizing transactions that may involve money or money worth, supported by documentary evidence.
Book-keeping is an art of recording business dealings in a set of books.
External Users include individuals or entities outside the organization, such as investors, lenders, suppliers, customers, tax authorities, government, auditors, and the public, who rely on accounting information for various purposes.
The management requires the most detailed financial information to make informed decisions regarding the operations and strategy of the organization.
Risk Accounting is not recognized as a distinct branch of accounting, unlike Managerial, Forensic, and Fiduciary Accounting.
Accounting can be influenced by personal judgments and interpretations, leading to potential bias in financial reporting.
Identifying the transaction is the first step in the accounting process.
Accounting can be influenced by personal judgments and interpretations, leading to potential bias in financial reporting.
Bookkeeping refers to the systematic recording of financial transactions, while accounting encompasses the broader process of summarizing, analyzing, and reporting financial data.
Internal Users include Owners, Managers, and Employees who utilize accounting data for decision-making and performance monitoring within the organization.
Accounting provides data on income and cost for managers, financial conditions of institutions, and the company's tax liability for a particular year.
Tax Authorities, Investors, and Creditors are all users of accounting information.
The Going-Concern Principle assumes that an accounting entity will continue to operate indefinitely, allowing a business to defer certain costs that are to be charged against the revenues of future periods.
Fiduciary Accounting is the branch of accounting that deals with the management and reporting of assets held in trust or on behalf of another party, including estate accounting.
Financial Accounting deals with the preparation of financial statements and reporting the financial position of an entity to external users.
Under the Companies Act 1956, all companies are required to maintain the books of accounts according to the accrual basis of accounting.
An example is calculating the price index for an Rx drug that costs $5.00 in 20X1, $5.25 in 20X2, and $5.50 in 20X3, resulting in a price index of 110% in 20X3.
Investors and other stakeholders rely on the independent opinion of external auditors regarding the accuracy of financial statements.
Internal users include individuals within the organization such as owners, managers, and employees who utilize financial data for decision-making.
Book-keeping is a part of accounting focused on record keeping or maintenance of books of accounts, providing the basis for accounting.
The Accrual Basis accounting method recognizes revenues and expenses when they are incurred, regardless of when cash transactions occur, providing a broader view of financial performance.
Investors require financial statements to assess the profitability and financial health of a company to make investment decisions.
Recognizing refers to the process of identifying and recording financial transactions in the accounting records.
The second paragraph presents the actual opinion of the independent certified public accountants regarding the financial statements.
In corporations, the accounting entity coincides with the legal entity.
Regulators need financial statements to ensure compliance with laws and regulations and to protect the interests of the public and investors.
Compliance with law in accounting ensures that financial practices adhere to legal standards and regulations, thereby promoting transparency and accountability.
A method of accounting where items like prepaid expenses, outstanding expenses, accrued income, and un-accrued income are not present in the balance sheet.
A method of accounting where revenues are recorded when they are received and expenses are recorded when they are paid.
Revenues are recorded when they are earned, which may be before or after they are received.
A receivable is recorded when payment is not received at the point of sale.
Forensic accounting is a specialized accounting service that focuses on legal affairs, including inquiries into fraud, legal cases, and dispute and claims resolution.
The Accrual Basis of Accounting is a method where income and expenditure relating to the accounting period are fully accounted for, even if income is still to be received and expenditure is yet to be paid for.
Employees in the finance department use accounting information as part of their job description, which includes preparing and reviewing various financial reports such as financial statements.
A method of accounting where revenues and expenses are recorded only when cash is received or paid.
Accounting helps in accurately calculating income and expenses, which is essential for determining tax obligations.
The purpose of accounting is to provide information to managers, give quantitative information to economic decision makers, and serve as a basis for decision making.
The scope of accounting includes keeping systematic records, ascertaining profitability, ascertaining financial position, and assisting in decision making, but does not typically include considering qualitative elements.
Internal users include individuals within the organization, such as owners, managers, and employees, who rely on accounting data for business decisions.
It is the art of classifying business transactions.
Cost Accounting is a branch of accounting that focuses on capturing a company's total production cost by assessing the variable and fixed costs associated with the production process.
The Cash Basis accounting method records revenues and expenses when cash is actually received or paid, making it effective for tracking cash inflows and outflows.
Accounting provides financial information that helps stakeholders make informed decisions regarding resource allocation, investments, and operational strategies.
An accounting entity consists of people, assets, liabilities, and activities devoted to a specific economic purpose, with accounting information developed for clearly identified entities like sole proprietorships, partnerships, and corporations.
Bookkeeping is the systematic recording of financial transactions in an organization.
Despite the goal of objectivity, accounting data may still be subject to bias due to alternative accounting methods and future uncertainties.
The Conservatism Principle is related to the Objectivity Principle as it emphasizes the need for accounting methods that reflect a cautious approach to uncertainty, ensuring that financial statements are not misleading.
Accounting often presents an estimated financial position rather than an exact or real position, leading to potential inaccuracies.
Accountancy is the profession or practice of accounting, encompassing the principles and procedures used in financial reporting.
Accounting ensures accurate financial records, which are necessary for calculating and reporting tax obligations.
Accounting helps in accurately calculating taxable income and ensuring compliance with tax regulations, thus facilitating timely tax payments.
Accurate financial records and statements demonstrate a business's creditworthiness, making it easier to secure loans from financial institutions.
The Income Statement will show higher income.
That all financial transactions should be recorded in a stable currency, ensuring clarity and consistency in financial reporting.
The primary responsibility for the accuracy of the financial statements belongs to the management.
Accounting provides data on income and cost for managers, financial conditions of institutions, and the company's tax liability for a particular year.
Forensic accountants reconstruct financial data to decode fraudulent information or convert a cash accounting system to accrual accounting.
A fiduciary accountant manages any account and activities related to the administration and guardianship of property.
Book-keeping is the systematic recording of financial transactions and maintaining financial records.
Preparing and monitoring budgets effectively requires reliable accounting data to assess various activities, processes, products, services, segments, and departments of the business.
Accountancy refers to a systematic knowledge of accounting, explaining why and how to prepare the books of accounts and how to summarize and communicate accounting information to interested parties.
Recording is the process of documenting financial transactions in accounting.
Under the Materiality Principle, accounting transactions that are too small or insignificant to affect user actions are recorded in the most expedient manner, saving the expense of more complex accounting procedures.
Book-keeping focuses on the recording of transactions, while accounting encompasses a broader scope that includes analysis, interpretation, and reporting of financial data.
A ledger is a book or digital record that contains all the accounts of a business and their balances, used to track financial transactions.
Management Accounting is a branch of accounting that provides financial and non-financial information to managers for decision-making, planning, and control.
Investors need Accounting information to assess the profitability and financial health of a company to make informed investment decisions.
Ascertaining financial position refers to evaluating the assets, liabilities, and equity of an entity at a specific point in time to understand its financial health.
Return-on-investment calculations are crucial for managers when evaluating the potential profitability of proposed projects, supported by reliable estimates of costs and revenues.
It is the process of recognizing and recording business transactions that occur within an organization.
Cost accounting is most used in the manufacturing industry, which has a lot of resources and costs to manage.
Accounting provides valuable information that helps management make informed decisions and strategize effectively.
Bookkeeping focuses on the recording of transactions, accounting involves summarizing and analyzing those transactions, while accountancy encompasses the broader practice and profession of accounting.
This basis is not recognised under the Companies Act 1956.
The Income Statement will show lower income.
The Income Statement will show a relatively lower income.
The concept that financial reporting should be based on objective evidence and verifiable data, minimizing bias.
Branches of accounting refer to the various specialized areas within the field of accounting, including financial accounting, management accounting, tax accounting, and auditing.
Accounting involves the broader process of financial management, including analysis and reporting, while bookkeeping focuses specifically on the recording of transactions.
External Users include Investors, Lenders, Suppliers, Customers, Tax Authorities, Government, Auditors, and the Public who rely on financial information for various purposes outside the organization.
It is the art of summarizing financial transactions.
Users of accounting information include internal parties like owners, managers, and employees, as well as external parties such as investors, lenders, suppliers, customers, tax authorities, government, auditors, and the public.
Costs that can be deferred include undepreciated assets, ending inventories, and prepaid expenses.
Bookkeeping is the art of proper and systematic identification and recording of business transactions in the maintenance of books of accounts, such as journals, ledgers, cash, and subsidiary books. It often involves routine and clerical activities, including recording in the journal, posting to the ledger, and balancing accounts.
Management Accounting focuses on providing information for internal decision-making and management purposes.
Internal users include owners, managers, and employees who utilize accounting information for decision-making within the organization.
Cost accounting is a type of managerial accounting used internally to assess a company’s operations by recording and analyzing manufacturing costs, including fixed and variable costs.
External Users are individuals or entities outside the organization, such as investors, lenders, suppliers, customers, tax authorities, government, auditors, and the public, who rely on financial information for various purposes.
Users of financial information include internal parties like owners, managers, and employees, as well as external parties such as investors, lenders, suppliers, customers, tax authorities, government, auditors, and the public.
Double-entry bookkeeping is an accounting method where every financial transaction affects at least two accounts, ensuring the accounting equation stays balanced.
External Users are individuals or entities outside the organization, such as investors, lenders, suppliers, customers, tax authorities, government, auditors, and the general public, who rely on financial information for various purposes.
Accounting provides essential financial information that helps management make informed decisions.
'All of these' refers to the inclusion of Cost Accounting, Management Accounting, and Tax Accounting as distinct branches of accounting.
Accounting tracks and records asset transactions, allowing for better oversight and management of resources.
Accounting helps in creating budgets by providing historical data and financial forecasts.
Comparability allows users to compare financial statements of different entities or periods to identify trends and make evaluations.
Understandability indicates that financial information should be presented clearly and concisely, making it accessible to users with varying levels of financial knowledge.
The Income Statement will show a relatively higher income.
Expenses are recorded when they are incurred, which may be before or after they are paid.
Payables are recorded when payment is not made at the time of purchase.
The Monetary Principle allows for the comparison of financial statements between and within firms by using money as a stable unit of value.
Tax authorities conduct audits of tax returns filed by businesses to verify the information against underlying accounting records and cross-reference accounting information of suppliers and consumers to identify potential tax evaders.
Cash basis of accounting is a method of accounting where transactions are recorded at the time when physical cash is actually received or paid out.
Financial Accounting deals with the preparation of financial statements that provide information about the financial position and performance of a business.
Bookkeeping is the process of recording financial transactions systematically and accurately to maintain a company's financial records.
Tax authorities determine whether a business declared the correct amount of tax in its tax returns.
External Users include individuals or entities outside the organization, such as investors, lenders, suppliers, customers, tax authorities, government, auditors, and the public, who use accounting information to make informed decisions.
Internal Users include individuals within an organization such as owners, managers, and employees who use financial information for decision-making.
Employees have shown increased interest in accounting information, especially in startups, due to the rise in shares and share options schemes, as they want to understand the financial health of the organization they may join.
Various users of Accounting information include investors, creditors, management, employees, and regulatory agencies, each with distinct needs for financial data.
Users of financial information include investors, creditors, management, regulators, and other stakeholders who rely on financial statements to make informed decisions.
Managers rely on accounting data to make informed business decisions, including investment, financing, and pricing decisions.
The scope of accounting includes keeping systematic records, ascertaining profitability, determining financial position, assisting in decision making, and fulfilling compliance with the law.
Variable costs are costs that change with the level of production or sales, such as shipping charges.
Accounting is the process of summarizing, analyzing, and reporting financial transactions to provide useful information for decision-making.
Lenders offer loans and other credit facilities based on the assessment of the financial health of borrowers.
Accounting provides relevant financial information that helps stakeholders make informed decisions regarding resource allocation, investments, and operational strategies.
Consistency in applying accounting principles ensures that financial statements are comparable over time, allowing users to make informed decisions based on reliable data.
Accounting provides a systematic record of financial transactions, reducing reliance on memory for financial information.
Accounting helps determine the net income or loss of an entity by systematically recording revenues and expenses.
Accounting allows for the comparison of financial data over different periods or against other entities, enhancing analysis and decision-making.
The principle that assets should be recorded at their original purchase price, rather than their current market value.
It is the art of classifying business transactions.
Managerial accounting includes budgeting and forecasting, cost analysis, financial analysis, and reviewing past business decisions.
The CPA's independent status is important because it ensures objectivity and fairness in rendering an opinion on the financial statements.
Internal Users include individuals within the organization such as owners, managers, and employees who use accounting information for decision-making and operational purposes.
Accounting involves interpreting, classifying, analyzing, reporting, and summarizing financial data to provide insights for decision-making.
The Materiality Principle refers to the relative importance of an item, indicating that an item is considered material if it significantly affects the financial statements and influences the decisions of prudent users.
Accounting is the process of summarizing, analyzing, and reporting financial transactions, which includes interpreting financial data and preparing financial statements.
Financial Accounting deals with the preparation of financial statements that provide information about the financial position and performance of a business.
Suppliers need accounting information of their key customers to assess whether their business is in good health, which is necessary for sustainable business growth.
Cost Accounting involves the analysis of costs associated with production and helps in determining per unit cost.
External users include investors, lenders, suppliers, customers, tax authorities, government entities, auditors, and the public who require accounting information for various assessments.
Fixed costs are unchanging and constant costs, such as rent, that do not vary with the level of production or sales.
A, B, and D refer to the art of recording, classifying, and summarizing financial transactions.
Lenders use accounting information of borrowers to assess their credit worthiness, which is their ability to pay back any loan.
Good financial health is indicated by the borrower's ability to pay liabilities on time, high profitability, substantial securable assets, and liquidity.
Journalists and analysts are part of the general public who may be interested in a company's accounting information, often to report on or analyze economic developments.
The use of historical cost is an example of the Conservatism Principle, as it tends to avoid overstatement of asset values.
Regulatory agencies use Accounting information to ensure compliance with laws and regulations, protecting the interests of the public and investors.
It involves compiling and presenting financial data in a concise format to facilitate understanding and decision-making.
It ensures that relevant stakeholders receive the necessary information to make informed decisions based on financial data.
Revenues are recorded when they are received, which may be before or after they are earned.
Financial statements match revenues to the expenses incurred in earning them.
Management Accounting deals with decision making and provides information to managers for planning and controlling operations.
The Consistency Principle is related to the Objectivity Principle as both emphasize the importance of maintaining stable accounting methods for reliable financial reporting.
For firms about to liquidate, the Going-Concern Principle is ignored, with assets reported at the current liquidating value and liabilities at the amount required to settle debts immediately.
Accounting provides accurate financial information that helps stakeholders make informed decisions.
Shorter time periods, such as one month, months, and year-to-date, may also be used for presenting financial reports.
It helps owners decide whether to invest further in the business or allocate their financial resources to more promising ventures.
Summarizing is the process of compiling and presenting financial data in a concise format.
The first paragraph describes the scope of the examination conducted by the independent certified public accountants.
Nonrelated business interests are accounted for separately in any arrangement of accounting entities.
To ascertain profitability means to evaluate the financial performance of a business to determine its ability to generate profit over a specific period.
Accounting provides metrics and reports that help evaluate the performance of a business over time.
It refers to the organization of recorded transactions into categories for better analysis and reporting.
Borrowers can only get a loan from lenders if they can prove that they don’t need the money.
Consistency means that the same accounting principles and methods are applied over time, allowing for reliable comparisons.
Under Cash Basis, an accountant has no options to make a choice as such.
No receivables are recorded.
Cost Accounting is a branch of accounting that focuses on capturing a company's total production cost by assessing the variable and fixed costs associated with the production process.
The purpose of financial accounting is to conform to external regulations and provide accurate financial information, rather than for internal analysis by employees.
An audit opinion issued by independent certified public accountants after auditing the financial statements and accounting records of a business, published as part of the company’s annual report.
Types of evidence include invoices, cancelled checks, bank statements, inventory counts, deeds, contracts, and the use of historical costs.
External users consist of individuals or entities outside the organization, such as investors, lenders, suppliers, customers, tax authorities, government, auditors, and the public, who rely on financial statements for various purposes.
Accounting can be influenced by personal judgments and biases, affecting the accuracy of financial reporting.
A trial balance is a report that lists the balances of all accounts in the ledger at a specific point in time, used to verify that total debits equal total credits.
'All of these' refers to the inclusion of Cost Accounting, Management Accounting, and Tax Accounting as branches of accounting.
Generally accepted auditing standards are a set of guidelines that auditors follow to ensure the accuracy and reliability of financial statements during an audit.
A method of accounting that recognizes revenues and expenses when they are incurred, regardless of when cash is exchanged.
No method of tracking partial payments is available under Cash Basis.
A method of accounting where items like prepaid expenses, outstanding expenses, accrued income, and un-accrued income are present in the balance sheet.
Accounting provides relevant financial information that aids users in making informed financial decisions.
Financial statements reflect revenues and expenses based on when transactions were entered.
Internal Users include individuals within the organization such as owners, managers, and employees who utilize financial information for decision-making.
An Independent CPA Opinion is a formal statement by a certified public accountant indicating that they have examined a company's financial statements and found them to present a fair view of the company's financial position and operations, in accordance with generally accepted auditing standards.
Industrial consumers need accounting information about suppliers to assess whether they have the required resources for a steady supply of goods or services in the future.
Creditors require Accounting information to evaluate the creditworthiness of a business and determine the risk of lending.
Creditors seek financial statements to evaluate the creditworthiness and repayment capacity of a business before extending credit.
A method of accounting where revenues and expenses are recorded in full, even though partial payments may be made over extended time periods.
Relevance means that the financial information provided is useful for decision-making purposes, helping users to make informed choices.
It ensures that all business events are quantified and can be measured in a consistent manner for financial reporting.
Accounting provides financial statements and reports that help determine the worth of a business through asset valuation and income assessment.
Accounting records serve as official documentation that can be used in legal proceedings to verify financial transactions and business operations.
The principle that once an accounting method is adopted, it should be used consistently throughout the financial reporting process.
Management Accounting is a branch of accounting that provides financial and non-financial information to managers for decision-making, planning, and control.
External users include individuals or entities outside the organization, such as investors, lenders, suppliers, customers, tax authorities, government, auditors, and the public, who use financial information to assess the organization's performance.
Tax Accounting is a branch of accounting that deals with the preparation of tax returns and tax payments, ensuring compliance with tax laws and regulations.
The Income Basis accounting method focuses on recognizing income when earned and expenses when incurred, similar to the Accrual Basis but with specific applications for certain types of income.
Continuity in the supply of quality inputs is essential for any business to ensure consistent operations and maintain product quality.
Management utilizes Accounting information for planning, controlling, and making strategic decisions to enhance business performance.
Employees review accounting information in the annual report to understand the company's performance, which can have implications for their job security and income.
Accounting systems track and monitor assets, ensuring proper management and safeguarding against loss or misappropriation.
It involves examining financial data to derive insights and inform decision-making processes.
Accounting provides a clear picture of an entity's assets, liabilities, and equity, allowing stakeholders to assess its financial health.
Expenses are recorded when they are paid, which may be before or after they are incurred.
No payables are recorded.
Accounting allows organizations to track their financial performance and manage resources effectively.
Cost Accounting deals with the calculation and analysis of per unit cost of products or services to aid in budgeting and financial decision making.
Tax Accounting is a branch of accounting that deals with the preparation of tax returns and tax payments, ensuring compliance with tax laws and regulations.
Customers are external users who may not be concerned with the financial information of their suppliers, focusing instead on the products and services offered.
Users of financial information include internal parties like owners, managers, and employees, as well as external parties such as investors, lenders, suppliers, customers, tax authorities, government, auditors, and the public.
The Cash flow basis accounting method emphasizes the actual cash movements in and out of a business, providing insights into liquidity and cash management.
Accounting does not typically account for changes in price levels, which can distort the true value of financial statements over time.
Management uses financial statements to make strategic decisions, assess performance, and plan for the future of the organization.
Accounting ensures that financial records and reports adhere to laws and regulations, helping organizations meet their legal obligations.
Under Accrual Basis, an accountant has options like LIFO, FIFO, or SLM/WDV to manipulate accounts.
Individuals or groups that utilize financial statements to make informed decisions, including investors, creditors, and management.
Reliability refers to the quality of information being dependable and trustworthy, ensuring that users can rely on the financial statements.
Poor financial health is demonstrated by poor liquidity, low profitability, lack of assets that can be secured, and an inability to pay liabilities on time.
In proprietorships, the accounting entity is distinct, but the proprietor is the legal entity liable for both personal and business obligations.
Window dressing refers to the practice of presenting financial information in a misleading way to make a company's financial position appear better than it actually is.
This basis is recognised under the Companies Act 1956.
A method of accounting where revenues are recorded when they are earned and expenses are recorded when they are incurred.
The concept that financial statements should be prepared for specific periods of time, such as months or years.
Different areas of accounting, including financial accounting, managerial accounting, tax accounting, and auditing, each serving distinct purposes.
