Accounting Principles and Concepts

These flashcards cover the fundamental concepts of accounting principles, including types of accounting, roles of accountants, and financial metrics.

What are the three main types of accounting?

Tax accounting, managerial accounting, and financial accounting.

What is the focus of tax accounting?

Tax accounting focuses on the preparation and submission of tax returns.

What does managerial accounting entail?

Managerial accounting involves budgeting and internal financial management within an organization.

What is the purpose of financial accounting?

Financial accounting involves budgeting and financial reporting to external parties.

What is the role of a private accountant?

A private accountant works exclusively for one organization.

How does a public accountant differ from a private accountant?

A public accountant works for multiple firms and typically earns a salary from those firms.

What is the main objective of auditing?

Auditing involves reviewing and evaluating the work of an accountant.

What distinguishes independent auditing from regular auditing?

Independent auditing involves an unbiased third party reviewing the work of the accountant.

What do leverage ratios measure?

Leverage ratios measure the amount of borrowed funds used by an organization.

What do activity ratios assess?

Activity ratios assess how quickly inventory is being turned over within an organization.

What are the components of a balance sheet?

Assets, liabilities, and owner's equity.

How is owner's equity calculated?

Owner's equity is calculated as assets minus liabilities.