Basic Accounting Lecture Flashcards

Vocabulary-style flashcards based on the Basic Accounting lecture notes, covering definitions, economic classifications, entity types, accounting functions, and various branches and users of accounting information.

Accounting

A service activity whose function is to provide quantitative information, primarily financial in nature, about economic entities that is intended to be useful in making economic decisions.

Accounting (as a Science)

A social science with a body of knowledge which has been systematically gathered, classified, and organized; it is influenced by, and interacts with, economic, social and political environments.

Accounting (as a Practical Art)

A practice which requires the use of creative skill and judgment.

Production

The process of converting economic resources into outputs of goods and services that are intended to have greater utility than the required inputs.

Exchange

The process of trading resources or obligations for other resources or obligation.

Income distribution

The process of allocating rights to the use of output among individuals and groups in society.

Consumption

The process of using the final output of the production process.

Investment

The process of using current inputs to increase the stock of resources available for output as opposed to immediately consumable output.

Savings

The process by which individuals and groups set aside rights to present consumption in exchange for rights to future consumption.

Quantitative information

Information expressed in numbers, quantities or units.

Qualitative information

Information expressed in words or descriptive form.

Financial information

Information expressed in terms of money.

Economic entity

A separately identifiable combination of persons and property that uses or controls economic or scarce resources to achieve certain goals or objectives.

Not-for-profit or non-profit entity

An entity that carries out some socially desirable needs of the community or its members whose activities are not directed towards making profit.

Business entity

An entity that produces and distributes goods or services primarily for profit.

Identification

The accounting process of recognition or nonrecognition of business activities as accountable events based on whether they are quantifiable and affect assets, liabilities, and equity.

Accountable event

An economic activity that affects a financial element (asset, liability, or equity), results from a past activity, and has a cost that can be measured reliably.

Measurement

The accounting process of assigning peso amounts or numbers to economic transactions and events using money as the unit of measure.

Communication

The process of preparing and distributing accounting reports to potential users and interpreting the significance of the processed information.

Recording

The process of systematically committing business transactions to books of account in a chronological manner according to accounting rules.

Classifying

The grouping of similar and interrelated items into their respective classes.

Summarizing

Putting together or expressing in condensed or brief form the recorded and classified statements in financial statements.

Financial Accounting

The recording of transactions and preparation of general purpose financial statements for communication to external user groups.

Auditing

The examination of financial statements by an independent certified public accountant to express an opinion on the fairness of their presentation.

Management Accounting

A branch that incorporates cost accounting and other financial/non-financial data from wide sources for specific management decisions.

Financial Management

The branch responsible for setting financial objectives, making plans, obtaining finance, and safeguarding the entity's financial resources.

Taxation / Tax accounting

Involves the preparation of tax returns and rendering of advice regarding tax consequences of proposed business endeavors.

Government Accounting

Accounting for the national government and its instrumentalities, focusing on the custody and commitment of public funds.

Fiduciary Accounting

The handling of accounts managed by a person entrusted with the custody and management of property for the benefit of another.

Social Responsibility

Reporting of programs and projects concerning the upliftment of the welfare of the community or nation.

Environmental Accounting

The area of accounting focusing on programs, activities and projects dedicated to the care of Mother Earth.

Internal Users

Individuals such as managers, employees, officers, and internal auditors who make decisions directly affecting business operations.

External Users

Individuals or enterprises with financial interest who are not involved in daily operations, such as investors, lenders, and suppliers.

Investors

Providers of risk capital interested in the enterprise's ability to pay dividends to help them decide whether to buy, hold, or sell shares.

Lenders

Users interested in information to determine if their loans and attached interest will be paid when due.