Quiz 2: Business Environment

It involves the preparation and interpretation of financial statements primarily intended for external users.

• Bookkeeping

• Financial Accounting

• Management Accounting

It deals with the independent verification and examination of accounting records for the purpose of giving credibility to financial statements.

• Cost Accounting

• Financial Accounting

• Auditing

It involves the preparation of tax returns, interpretations, and application of tax rules in the determination of tax liability, analyzing tax effect on a firm’s or individual’s projects or plans.

• Forensic Accounting

• Cost Accounting

• Tax Accounting

The business is treated, as having a separate personality from the owner/s such the transactions of the business must be divorced from the transactions of the owner/s.

• Business Entity Concept

• Objectivity

• Cost Principle

This simply means that for the financial statements to be comparative, the application of the accounting methods, procedures, or principles must be consistent with the previous period.

• Objectivity

• Consistency

• Comparability

This simply means that the financial statements should reflect all significant events or facts, which might influence the decisions to be made by any interested party.

 

• Going Concern Concept

• Consistency

• Full Disclosure

It is assumed that the business will continue operations indefinitely unless there is evidence to the contrary.

• Going Concern Concept

• Business Entity Concept

• Cost Principle

These are principles (including concepts and assumptions), which have gained international acceptance in the business world and accountancy profession.

• PAAP

• SAAP

• GAAP

This simply means that the expenses of the business are recognized or recorded when incurred whether paid or not the revenue is recognized when earned whether collected or not.

• Objectivity

• Accrual Basis of Accounting

• Cost Principle

It uses “Fund Accounting” which deals with the administration or use of public community funds to bring about service to the people.

• Cost Accounting

• Financial Accounting

• Government or Non-Profit Accounting