Question

4- Learning the language of business
Match each of the numbered description 1 through 5 with the term or phrase it best reflects. Indicate your answer by writing the letter A through H for the term or phrase in the blank provided.

A. Audit
B. GAAP
C. Ethics
D. FASB
E. SEC
F. Public accounting
G. Net income
H. IASB

____1-An assessment of whether financial statement follow GAAP.
__G__2-Amount a business earns in excess of all expenses and costs associated with its sales and revenues.
__D__3-A group that sets accounting principle in the United States.
__F__4-Accounting professionals who provide services for many clients
__C__5-Principles that determine whether an action is right or wrong
_____________________________________________________

Answer 1

Answer:

1. Audit: An assessment of whether financial statement follow GAAP.

2. Net income: Amount a business earns in excess of all expenses and costs associated with its sales and revenues.

3. FASB: A group that sets accounting principle in the United States.

4. Public accounting: Accounting professionals who provide services for many clients

5. Ethics: Principles that determine whether an action is right or wrong

Explanation:

1. Audit

An audit is the assessment and evaluation of the financial statements in regard to the set standards by the GAAP. The GAAP referred to as Generally Accepted accounting Principles are a set of accounting guidelines that should be used in financial reporting. The aim of the audit is therefor to assess whether the financial report of the company being audited is withing the threshold of GAAP.

2. Net income

The net income can be defined as the amount business earns in excess of all expenses and costs associated with its sales and revenues. The net income can be calculated as shown;

Net income=Total revenue-total expenses, where the total revenue is the amount of income that the business earns in terms of sales, while the expenses are the total costs of running the business

3. FASB

Generally referred to as the Financial Accounting Standards Board, is a body constituted by a Board of accounting professional whose main role is to set accounting principle in the United States. They also regulate the practice of accounting the United States.

4. Public accounting

Public accounting refers to the groups of accountants that provide services to the public by using their accounting firms. They are generally accounting professionals who provide services for many clients.

5. Ethics

Ethics are rules and principles that measure the morality of an action. It can also be defined as principles that determine whether an action is right or wrong. Ethics are used in a professional set up to judge the activities or action of a professional. Ethical committees are always set up for this purpose. If an action is determined to be ethical then it is right, however if an action is unethical then it is wrong and should be punished.