Ole Miss Accy 201 Barton Test 1
Questions and Answers.
What is Accounting? - Answer The information system that provides reports to users about
the economic activities and condition of a business
What is GAAP (General Accepted Accounting Principle) - Answer is the collection of
accounting standards, principles, and assumptions that define how financial information will be
reported
2 characteristics of financial information - Answer Relevant: information has the potential to
impact decision making
faithful representation: information accurately reflects an entity's economic activity or condition
4 assumptions - Answer monetary unit: financial reports be expressed in a single monetary
unit or currency
time period: allows for the reporting of economic activities on a regular basis for a specific
period of time
business entity: limits the economic data in financial reports to that directly to that directly
related to the activities of the business
going concern: that reports be filed as if the entity will operate in the future
4 principles - Answer measurement: determines the amount that will be recorded and
reported, objective and verifiable
historical cost: recording an item at its initial transaction
revenue recognition: determines when revenue is recorded in the accounting records
expense recognition: requires expenses to be recorded in the same period as the related
revenue
The Accounting Equation - Answer Assets = Liabilities + Stockholders equity
Net Income/net profit/earnings - Answer The excess amount of revenue over expenses
What are assets accounts - Answer resources owned by a business; cash, land, buildings,
equipment
What are liabilities accounts - Answer the rights of creditors are debts of the business;
Questions and Answers.
What is Accounting? - Answer The information system that provides reports to users about
the economic activities and condition of a business
What is GAAP (General Accepted Accounting Principle) - Answer is the collection of
accounting standards, principles, and assumptions that define how financial information will be
reported
2 characteristics of financial information - Answer Relevant: information has the potential to
impact decision making
faithful representation: information accurately reflects an entity's economic activity or condition
4 assumptions - Answer monetary unit: financial reports be expressed in a single monetary
unit or currency
time period: allows for the reporting of economic activities on a regular basis for a specific
period of time
business entity: limits the economic data in financial reports to that directly to that directly
related to the activities of the business
going concern: that reports be filed as if the entity will operate in the future
4 principles - Answer measurement: determines the amount that will be recorded and
reported, objective and verifiable
historical cost: recording an item at its initial transaction
revenue recognition: determines when revenue is recorded in the accounting records
expense recognition: requires expenses to be recorded in the same period as the related
revenue
The Accounting Equation - Answer Assets = Liabilities + Stockholders equity
Net Income/net profit/earnings - Answer The excess amount of revenue over expenses
What are assets accounts - Answer resources owned by a business; cash, land, buildings,
equipment
What are liabilities accounts - Answer the rights of creditors are debts of the business;
