Accounting for Non- Accountants

Accounting for Non- Accountants

This course is designed for individuals without accounting background but will be able to learn and understand the principle, basic tools and techniques of the accounting process.


Regular or C-corporationA corporation is sometimes called a ______________________.
LiabilitiesA present obligation of the enterprise arising from past events, the settlement of which
American Accounting AssociationAAA stands for ___________________________.
Section 4 of the Partnership Act, 1932According to ____________________
FALSEAccording to Section 4 of the Partnership Act, 1934 partnership is “the relation between persons who have agreed to share the profits of a business carried on by all or anyone of them acting for all”.
TRUEAccounting concepts and principles provide a solid foundation of accounting treatments.
FALSEAccounting equation is not balanced all the time.
BusinessAccounting is also known as the "Language of _________________".
FALSEAccounting is based on a double entry system which means that the triple effects of a
Accounting is an information systemAccounting is recognized and characterized as a storehouse of information.
American Institute of Certified Public AccountantsAICPA stands for ______________________________________.
Monetary Unit AssumptionAll the financial transactions of a business should be capable of being expressed in a monetary unit.
An account is debited when an amount is entered on the [LEFT] side of the account and credited when an amount is entered on the [RIGHT] side.An account is debited when an amount is entered on the RIGHT side of the account and credited when an amount is entered on the LEFT side.
Full Disclosure PrincipleAn accounting entry may not independently be able to provide all the relevant information relating to the transaction. Requires the entity to disclose all the financial information relevant to the investor/user to assist him in decision making.
PartnershipAn agreement among two or more persons to carry on jointly a lawful business and to share the profits arising there from.
ConsistencyAn entity may decide to follow a particular accounting procedure in
FALSEAnalyzing Transactions is the second stage of accounting process.
CashAny medium of exchange that a bank will accept for deposit at face value. It includes coins, currency, checks, money orders, bank deposits and drafts.
Accumulated DepreciationApplies to property, plant and equipment except land as a contra account that contains the sum of periodic depreciation charges.
Accounts PayableAre funds you owe others—they sent you an invoice that is still “payable” by you.
Historical Cost ConceptAs a general rule, when certain economic resources or assets are acquired by an enterprise, they are recorded as per the cash or cash equivalent actually spent to acquire that resource or asset on the transaction date – even if the transaction happened the previous day or ten years ago.
Closing EntriesAt the end of a fiscal year, a company will complete its accounting cycle. In this step of the accounting cycle, temporary balances are reduced to zero in order to prepare the accounts for the following year’s transactions.
TRUECorporations are supposed to maintain detailed accounts for every transaction.
Extensive Record KeepingCorporations are supposed to maintain detailed accounts for every transaction. In fact a huge establishment is needed to maintain the records and accounts and the same will be verified by independent auditors.
FALSEDecreases in assets are recorded as debits
Matching ConceptDefines and states that, “while preparing the income statement, revenue and profits are matched with the related expenses incurred in generating them”.
TRUEEach account balance is determine by footing (adding) all the debits and credits.
Sales RevenuesEarned as a result of sale of merchandise; for e.g. sale of merchandise by General Merchandise Store.
Utilities ExpenseExpenses related to use of telecommunications facilities, consumptions of electricity, fuel and water.
Service CompaniesFirms that generally use their employees to provide intangible products or services to customers.
Accounting ResearchFocuses on the search for new knowledge on the effects of economic events on the process of summarizing, analyzing, verifying, and reporting standardized financial information, and on the effects of reported information on economic events.
Luca PacioliHe is the "The Father of Accounting and Bookkeeping".
Tax AccountingHelps clients follow rules set by tax authorities. It includes tax planning and preparation of tax returns.
Larger Pool of TalentIn a partnership, more co-owners and their skills contribute to the business and play complementary role to each other in the organization which is missing in the sole trade form of organization.
TRUEIn accounting, the accounts are classified using one of two approaches – modern approach
TRUEIncreases in assets are recorded as debits
LendersIndividuals or financial institutions that normally lend money to businesses and earn interest income on it.
Financial AccountingInvolves recording and classifying business transactions, and preparing and presenting financial statements to be used by internal and external users.
Sole ProprietorshipIs a business owned and managed by a single individual.
JournalIs a chronological record of the entity’s transactions. It is called the book of original entry.
Notes ReceivableIs a written pledge that the customer will pay the business a fixed amount of money on a certain date.
Bonds PayableIs an obligation in connection with the bond, a contract between the issuer and the lender specifying the terms of repayment and the interest to be charged.
Government AccountingIs concerned with the allocation and utilization of government budgets.
LedgerIs the reference book of the accounting system and is used to classify and summarize transactions, and to prepare data for basic financial statements.
Operating CycleIs the time between the acquisition of assets for processing and their realization in cash or cash equivalents.
CorporationIt can enter into binding contracts, buy and sell property, sue and be sued, be held responsible for its actions, and be taxed
The Accounting CycleIt can enter into binding contracts, buy and sell property, sue and be sued, be held responsible for its actions, and be taxed
Income SummaryIt is a temporary account used at the end of the accounting period to close the income and expenses. This account shows the profit or loss for the period before closing to the capital account.
AccountingIt is the art of recording, classifying, and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least of financial character, and interpreting the results thereof.
The Accounting CycleIt is the cumulative process of recording and processing the accounting events of a company.
Business Entity AssumptionIt states that every business entity should be treated as an entity that is separate from its owners.
Ease of Raising MoneyJust because of limited liability, corporations have proved to be the most effective form of ownership for accumulating large amount of capital.
AssetsMonetary or economic resources which are owned by an entity and are expressed to benefit it in future.
LiabilitiesObligations of an organization to pay to other entities including individuals, government and financial institutions, or other business.
TRUEOne of the most attractive features of a sole proprietorship is that it is fast and simple to begin.
CASH - [CREDIT]
UTILITIES/TELEPHONE EXPENSES - [DEBIT]
Paid telephone bill amounting to P8,000.
This Business Transaction effects the following account, which will be debited or credited.
Depreciation ExpensePortion of the cost of a tangible asset allocated or charged as expense during an accounting period.
TRUEPrinciples simply tell us that what accountants do which may be different from what accountants ought to do.
ACCOUNTS PAYABLE - [CREDIT]
OFFICE SUPPLIES - [DEBIT]
Purchased office supplies worth P30,000 on account.
This Business Transaction effects the following account, which will be debited or credited.
SummarizingPutting together or expressing in condensed or brief form the recorded and classified statements in financial statements.
Cost AccountingRefers to the recording, presentation, and analysis of manufacturing costs.
Service IncomeRevenues earned by performing services for a customer or client, for e.g. accounting services by a CPA firm, laundry services by a laundry shop.
CASH - [DEBIT]
SMITH, CAPITAL - [CREDIT]
Sebastian Smith, decided to create his own Wed Development Company.
He invested P150,000 to start his own Company.
This Business Transaction effects the following account, which will be debited or credited.
Merchandising CompaniesSell tangible products. This type of business buys finished or almost finished goods from their supplier and resell the same to customers.
TRUEThe accounting cycle is a step-by-step process to record business activities and events to keep financial records up to date.
MeasurementThe accounting proces(s) of assigning of peso amounts or numbers to the economic transactions and events
IdentificationThe accounting proces(s) of recognition or non- recognition of business activities as accountable events or whether has accounting relevance.
Particularis de computis et scripturisThe book was divided into various sections and the one that talked about double entry system was entitled as:
Bureaucratic ApproachThe bureaucratic habit of the company officials is to shirk troublesome initiatives because they get no direct benefit from it and often retards growth.
CASH - [CREDIT]
OWNER, WITHDRAWALS - [DEBIT]
The Businesss Owner, withdrew cash P25,000 for her personal use.
This Business Transaction effects the following account, which will be debited or credited.
Cost of SalesThe cost incurred to purchase or to produce the products sold to customers during the period; also called as cost of goods sold.
BalanceThe difference between the sum of the two sides of an account.
Owner's EquityThe financial value that would be left if all the assets were sold and the money from the sale was used to pay off all the liabilities.
Accounting equationThe foundation of modern double entry system of accounting being used by small proprietors to large multinational corporations.
ClassifyingThe grouping of similar and interrelated items into their respective classes.
The left-hand side of a T-account is called the [DEBIT SIDE], and the right-hand side is called the [CREDIT SIDE]The left-hand side of a T-account is called the DEBIT SIDE , and the right-hand side is called the CREDIT SIDE
TRUEThe life of proprietorship depends upon the life of the owner.
RecordingThe process of systematically committing to writing business transactions and events after they have been identified and measured, in books of account in a systematic and chronological manner according to accounting rules.
FALSEThere are Two Types of Merchandising Companies: Internal and External Merchandising.
Accounts ReceivableThese are claims against customers arising from sale of services or goods on credits. This type of receivable offers less security than a promissory note.
ExpensesThese are decrease in economic benefits during the period in the form of outflows or using
Prepaid ExpensesThese are expenses paid for by the business in advance. It is an asset because the business avoids, having to pay cash in the future for a specific expense.
AssetThese are resources controlled by the enterprise as a result of past events  and from which
Cash EquivalentsThese are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
Manufacturing CompaniesThey buy materials, convert them into products and then sell the products to the other companies or to the final customers.
CooperativesThey share responsibility equally, make collective decisions on the basis of one person one vote and mostly receive equal pay.
CapitalThis account is used to record original and additional investment of the owner of the business entity.
Mortgage PayableThis account records long-term debt of the business entity for which the entity has pledged certain assets as security to the creditor.
MaterialityThis accounting principle allows an entity to disregard another accounting principle if the result of the same does not affect the decision making of the user of the financial statements.
Going Concern AssumptionThis Accounting Principle states that the business entity will continue to operate for an indefinite amount of time.
Accounting EducationThis branch of accounting deals with developing future accountants by creating relevant accounting curriculum.
ConservatismThis concept defines and emphasizes that “the accountants are cautious people. Preparation of financial statements need good professional command and exact estimates of future by the accountants”.
SuppliesThis may be office supplies like bond papers, paper clips and the like or can be also store supplies like boxes, bags, packaging tapes and other related materials.
Accrual Basis of AccountingThis principle requires all revenue and expenditure to be recorded in the period it is actually incurred and not when cash or cash equivalent has been received/spent.
Management AccountingUses historical as well as estimated data to generate useful reports and information to be used by internal management for decision making purpose.
Financial Accounting Standards BoardWhat FASB stands for?
Generally Accepted Accounting PrinciplesWhat is GAAP stands for?
Asset = Liabilities + Owner's EquityWhat is the Accountin(g) Equation/Formula?