Accounting 121 Exam 1- CH 1-3

Accounting consists of three basic activities they are;

• identification, recording, communication

• identification, explaining uses, recording

• analyzing, reporting, organizes

• creating financial statements, processing transactions, withdrawing cash

Accumulating transactions over a certain amount of time and reporting the data as one amount in a company's financial statements is called

• reported in aggregate

• reported in standardization

• reported on time

• reported by explaining use

The recording of economic events is called

• Bookkeeping

• Identification

• Analyzing

• Accounting

Managers who plan, organize and run a business are

• Internal users

• External users

• Taxing authorities

• Regulatory agencies

The two most common types of external users are investors and company officers

• true

• false

The accounting standard body for the U.S. is the

• IRS (Internal Revenue Service)

• FASB (Federal Accounting Standards Board)

• FASB (Financial Accounting Standardsd Board)

• SEC (Securities and Exchange Commission

Convergence is the effort to reduce the differences between GAAP and IFRS

• true

• false

The principle that dictates that companies record assets at their cost when the asset as purchased and also over the time the asset is held.

• Relevance Principle

• Fair value Principle

• Historical Cost Principle

• Faithful Representation Principle

The principle that states assets and liabilities should be reported at fair value (price received to sell asset or settle liability)

• Fair Value Principle

• Historical Cost Principle

• Relevance Principle

• Faithful Representation Principle

Accounting data should only be expressed in money terms is the

• Economic Entity Assumption

• Monetary Unit Assumption

• Fair Value Principle

• Historical Cost Principle