Business Intro Chapter 17 Credible
Notes
Accounting - Answer: The recording, classifying, summarizing, and interpreting of financial events and
transactions to provide management and other interested parties the information they need to make
good decisions.
Outside parties - Answer: such as employees, owners, creditors, unions, investors, and the government
—make use of a firm's accounting information.
Users: Government taxing authorities (e.g., the Internal Revenue Service) - Answer: Type of Report: Tax
returns
Users: Government regulatory agencies - Answer: Type of Reports: Required reports
Users: People interested in the organization's income and financial position (e.g., owners, creditors,
financial analysts, suppliers) - Answer: Type of Reports: Financial statements found in annual reports
(e.g., income statement, balance sheet, statement of cash flows)
Users: Managers of the firm - Answer: Financial statements and various internally distributed financial
reports
Accounting Cycle - Answer: A six-step procedure that results in the preparation and analysis of the major
financial statements.
Bookkeeping - Answer: The recording of business transactions.
Bookkeepers divide a firm's transactions into meaningful categories and post them into a record book or
computer program called a (Blank) - Answer: journal
Double-entry bookkeeping - Answer: The practice of writing every business transaction in two places;
done so they can check one list of transactions against the other for accuracy.
, Ledger - Answer: A specialized accounting book or computer program in which information from
accounting journals is accumulated into specific categories and posted so that managers can find all the
information about one account in the same place.
Trial balance - Answer: A summary of all the financial data in the account ledgers that ensures the
figures are correct and balanced.
Using Technology in Accounting - Answer: •Computerized accounting programs post information
instantly and from remote locations
.•Accounting software, such as Intuit's QuickBooks, address the specific needs of small businesses.
Financial statement - Answer: A summary of all the transactions that have occurred over a particular
period.
Key financial statements of business are: - Answer: •Balance sheet
•Income statement
•Statement of cash flows
Fundamental accounting equation - Answer: The basis for the balance sheet.
The Fundamental Accounting Equation - Answer: •The equation must always be balanced and includes
the formula:
•Assets = Liabilities + Owners Equity
Balance sheet - Answer: Financial statement that reports a firm's financial condition at a specific time
and is composed of three major accounts: assets, liabilities, and owners' equity.
Assets - Answer: Economic resources (things of value) owned by a firm; items can be tangible or
intangible.
Liquidity - Answer: The ease with which an asset can be converted into cash.
Notes
Accounting - Answer: The recording, classifying, summarizing, and interpreting of financial events and
transactions to provide management and other interested parties the information they need to make
good decisions.
Outside parties - Answer: such as employees, owners, creditors, unions, investors, and the government
—make use of a firm's accounting information.
Users: Government taxing authorities (e.g., the Internal Revenue Service) - Answer: Type of Report: Tax
returns
Users: Government regulatory agencies - Answer: Type of Reports: Required reports
Users: People interested in the organization's income and financial position (e.g., owners, creditors,
financial analysts, suppliers) - Answer: Type of Reports: Financial statements found in annual reports
(e.g., income statement, balance sheet, statement of cash flows)
Users: Managers of the firm - Answer: Financial statements and various internally distributed financial
reports
Accounting Cycle - Answer: A six-step procedure that results in the preparation and analysis of the major
financial statements.
Bookkeeping - Answer: The recording of business transactions.
Bookkeepers divide a firm's transactions into meaningful categories and post them into a record book or
computer program called a (Blank) - Answer: journal
Double-entry bookkeeping - Answer: The practice of writing every business transaction in two places;
done so they can check one list of transactions against the other for accuracy.
, Ledger - Answer: A specialized accounting book or computer program in which information from
accounting journals is accumulated into specific categories and posted so that managers can find all the
information about one account in the same place.
Trial balance - Answer: A summary of all the financial data in the account ledgers that ensures the
figures are correct and balanced.
Using Technology in Accounting - Answer: •Computerized accounting programs post information
instantly and from remote locations
.•Accounting software, such as Intuit's QuickBooks, address the specific needs of small businesses.
Financial statement - Answer: A summary of all the transactions that have occurred over a particular
period.
Key financial statements of business are: - Answer: •Balance sheet
•Income statement
•Statement of cash flows
Fundamental accounting equation - Answer: The basis for the balance sheet.
The Fundamental Accounting Equation - Answer: •The equation must always be balanced and includes
the formula:
•Assets = Liabilities + Owners Equity
Balance sheet - Answer: Financial statement that reports a firm's financial condition at a specific time
and is composed of three major accounts: assets, liabilities, and owners' equity.
Assets - Answer: Economic resources (things of value) owned by a firm; items can be tangible or
intangible.
Liquidity - Answer: The ease with which an asset can be converted into cash.
