Electronic funds transfer (EFT) is the use of electronic communication to transfer cash from one party to another.

Basic bank services such as bank accounts, bank deposits, and checking contribute to the control and safeguarding of cash.

Checking accounts are also called demand deposits.

The principles of internal control include: establish responsibilities, maintain adequate records, insure assets, separate recordkeeping from custody of assets, and perform regular and independent reviews.

Accounting is an information and measurement system that communicates financial information to users.

Ownership of a corporation is divided into units called shares or stock.

A sole proprietorship is one or more individuals selling products or services for profit.

Unlimited liability is an advantage of a sole proprietorship.

The three major activities of a business are operating, financing, and investing.

External users of accounting information are directly involved in running an organization.

Ethics and social responsibility are not important to the primary functions of accounting.

Net Income is the amount a business earns after subtracting all expenses and costs from sales.

Return on investment is also known as return on assets.

The four basic financial statements include the balance sheet, income statement, statement of retained earnings, and statement of cash flows.

The balance sheet is based on the accounting equation.

The income statement reports on operating activities at a point in time.

The statement of cash flows reports on cash flows separated into operating, investing, and financing activities over a period of time.

In the partnership form of business, the owners of a business are called stockholders.

A company's fiscal year must correspond with the calendar year.

The revenue recognition principle is the basis for making adjusting entries that pertain to unearned and accrued revenues.

The cash basis of accounting requires that revenues be recognized when cash payments from customers are received.

The accrual basis of accounting is an accounting system in which revenues are reported as earned when cash is received.

Generally, accrual basis accounting results in net income that more closely reflects the economic effects of revenues and expenses for the period than does the cash basis accounting.

Adjusting entries result in a better matching of revenues and expenses.

Adjustments are usually necessary for transactions and events that extend over more than one accounting period.