What are the four professional certifications for accountants?

CPA, CMA/CGMA, CFP, CIA.

What does GAAP aim to make information?

Relevant and a faithful representation.

What does the SEC oversee?

Proper use of GAAP for companies on US stock exchanges.

What does the FASB do?

Sets U.S. GAAP and develops accounting principles.

What does the IASB issue?

International financial reporting standards.

What does the statement of cash flows summarize?

Cash inflows and outflows over a period.

What is the formula for ending cash?

Beginning cash + operating + investing + financing cash flows.

How do you compute Return on Assets?

Net income / average total assets.

How do you compute average total assets?

(Beginning assets + ending assets) / 2.

What is the measurement (cost) principle?

Accounting info is based on actual cost measured in cash or cash value.

What does objectivity mean in accounting?

Info supported by independent, unbiased evidence.

When is revenue recognized?

When goods/services are provided and at the expected amount.

What is the matching principle?

Record expenses in the same period as related revenues.

What is the full disclosure principle?

Report details that impact users’ decisions.

What is a source document?

Describes transactions entering the accounting system.

What is an account?

Record of increases/decreases in a specific item.

What is a ledger?

Record containing all accounts and balances.

What is a chart of accounts?

List of all ledger accounts with ID numbers.

What is a trial balance?

List of accounts and balances where debits equal credits.

What is intracompany comparison?

Comparing results across periods of the same company.

What is intercompany comparison?

Comparing results across competitors.

What are guidelines comparisons?

Comparing results to standards based on experience.

What is liquidity?

Ability to meet short‑term obligations.

What is solvency?

Ability to meet long‑term obligations.

What is profitability?

Ability to provide financial rewards to investors.

What are market prospects?

Ability to generate positive market expectations.

What is the debt ratio formula?

Total liabilities / total assets.

What is a reporting period?

Time period used for financial statements.

What is a fiscal year?

One‑year reporting period.

What is financial leverage?

Using debt to increase return on equity.

What are annual financial statements?

Reports covering one year.

What are interim financial statements?

Reports covering 1, 3, or 6 months.

What is accrual basis accounting?

Records revenue when delivered and expenses when incurred.

What is cash basis accounting?

Records revenue when cash received and expenses when cash paid.

What are the two principles of adjusting?

Revenue recognition and matching.

What are the four types of adjustments?

Deferred expense, deferred revenue, accrued expense, accrued revenue.

What are the three adjusting steps?

Determine current balance, determine correct balance, record adjusting entry.

What does every adjusting entry affect?

One income statement account and one balance sheet account.

What are plant assets?

Tangible long‑lived assets used to produce or sell.

What is straight‑line depreciation?

Allocates equal cost each period.

What is accumulated depreciation?

Total depreciation recorded for an asset.

What are accrued expenses?

Costs incurred but unpaid and unrecorded.

What are accrued revenues?

Revenues earned but unrecorded and not received.

What is an adjusted trial balance?

Includes all accounts and balances after adjustments.

What is the income summary account?

Temporary account summarizing revenues and expenses.

What are temporary accounts?

Revenues, expenses, withdrawals

What are permanent accounts?

Balance sheet accounts not closed.

What is RPA?

Software bots automating repetitive tasks.

What transfers to the balance sheet?

Assets, liabilities, retained earnings.

Which accounts start at zero next period?

Revenue, expense, dividend accounts.

What are the closing steps?

Close credits, close debits, close income summary, close dividends.

What is a post‑closing trial balance?

List of permanent accounts after closing.

What is the accounting cycle?

Analyze, journalize, post, unadjusted TB, adjust, adjusted TB, statements, close, post‑closing TB.

What is an unclassified balance sheet?

Groups assets, liabilities, equity broadly.

What is a classified balance sheet?

Organizes into subgroups for more info.

What is the order of a classified balance sheet?

Current assets, long‑term investments, plant assets, intangibles, current liabilities, long‑term liabilities.

What is the operating cycle?

Time from cash out to cash received.

What are common current assets?

Cash, short‑term investments, A/R, notes receivable, inventory, prepaid expenses.

What are intangible assets?

Long‑term nonphysical assets like trademarks, patents, goodwill.

What is profit margin?

Net income / net sales.

What is the current ratio?

Current assets / current liabilities.

What is gross profit?

Net sales minus cost of goods sold.

What is COGS formula?

Beginning inventory + purchases − ending inventory.

What is a perpetual inventory system?

Updates records for each purchase and sale.

What is a periodic inventory system?

Updates records only at period end.

What does n/30 mean?

Payment due in 30 days.

What does 2/10 n/30 mean?

2% discount if paid in 10 days.

What is net cost of merchandise purchases?

Invoice cost − discounts − returns + transportation‑in.

What is a sales return?

Customer returns goods.

What is a sales allowance?

Reduction in price for damaged goods.

What is the acid‑test ratio?

(Cash + short‑term investments + A/R) / current liabilities.

What is the gross margin ratio?

Gross profit / net sales.

What is consignment?

Selling goods owned by another business.

Who is the consignor?

Owner of goods.

Who is the consignee?

Seller of goods.

What is NRV?

Sales price minus cost to sell.

What is LCNRV?

Report lower of cost or NRV.

What is the conformity rule?

If using LIFO for taxes, must use LIFO for financial statements.

What is inventory turnover?

COGS / average inventory.

What is average inventory?

(Beginning + ending inventory) / 2.

What is days sales in inventory?

Ending inventory / COGS × 365.

What is shrinkage?

Inventory loss from theft or deterioration.

What accounts must be closed for a merchandiser?

Sales, sales discounts, sales returns, COGS.

What is a multiple‑step income statement?

Shows gross profit, income from operations, nonoperating items.

What is a single‑step income statement?

Revenues − expenses = net income.

What is internal control?

Policies to protect assets, ensure reliable accounting, promote efficiency.

What does SOX require?

Document and verify internal controls.

What are the principles of internal control?

Establish responsibilities, maintain records, insure assets, separate duties, divide tasks, apply tech, review.

What is the fraud triangle?

Opportunity, pressure, rationalization.

What are cash equivalents?

Short‑term investments convertible to known cash within 3 months.

What are goals of cash management?

Plan receipts, meet payments, keep minimum cash.

What is cash over and short?

Account for differences between expected and actual cash.

What is a voucher system?

Procedures controlling cash payments and liabilities.

What is petty cash used for?

Small payments like postage or minor repairs.

What is a bank reconciliation?

Verifies accuracy of bank statement and cash account.

What is days sales uncollected?

A/R / sales × 365.

What is blockchain in accounting?

Tech that makes ledgers harder to change and auto‑updates records.

What is the first step in bank reconciliation?

Start with bank statement balance.

What is added to bank balance?

Deposits in transit and bank errors understating balance.

What is subtracted from bank balance?

Outstanding checks and bank errors overstating balance.

What must adjusted bank and book balances do?

Match.