ACCT 2401 Movahed Final Exam Study Guide | Accounting Review, Key Concepts & Practice
Questions
financial accounting - ✔✔process of recognizing, measuring, recording, and reporting info
about a businesses transactions to stakeholders outside the business.
GAAP - ✔✔Generally Accepting Accounting Principals. Rules and concepts established by the
accounting profession. (created by FASB)
business entity principle - ✔✔dictates that the financial affairs of a business org must be kept
separate from the personal finance affairs of the owners.
reliability principle - ✔✔requires info to be verifiable, confirmable by any independent
observer, also called objectivity.
cost principle - ✔✔when a business acquires assets or services, they should be recorded at
their actual cost. Historical cost.
cash accounting - ✔✔recognizes transactions only when cash is received or disbursed
accrual accounting - ✔✔recognizes a transaction when it occurs, not when cash is rec. or
disbursed.
common stock - ✔✔stockholders equity that is the result of the owners of the business
investing money (or other assets) into the business
retained earnings - ✔✔stokholders equity that is the result of the bus. having net income, or
net earnings, that have been retained in the business.
,accounts payable - ✔✔liability incurred by a business when purchasing goods or services
note payable - ✔✔liability represented by written promise that requires future payment
income statement - ✔✔fin. statement that reports that revenue and expense of a business
during a given period of time
statement of retained earnings - ✔✔reports the amount of accumulated net profits a business
has retained and not paid in dividends since inception. Beginning balance, plus net income or
minus net loss in the given period, less the dividends, = retained earnings.
balance sheet - ✔✔reports the assets, liabilities, and stockholders equity of a bus. at a specific
point in time.
promissory note - ✔✔written pledge to pay a fixed amount of money at a later date
debit - ✔✔left side of any account. entry made on the left side.
credit - ✔✔right side of any account. entry made on the right side.
T-account - ✔✔informal account form used to summarize transactions, where the top of the T
holds the account title and the base divides the debit and credit sides of the account.
general journal - ✔✔the chronological accounting record of the transactions of a business.
journalize - ✔✔entering a transaction in a journal.
, general ledger - ✔✔accounting record summarizing, in accounts, the transactions of a business
and showing the resulting ending account balances.
compound journal entry - ✔✔journal entry that affects more than 2 accounts
balance - ✔✔diff. b/w an accounts total debit and total credit amounts; ending value.
trial balance - ✔✔list of all accounts of a business and their balances; its purpose is to verify
that the total debits=total credits
accounting cycle - ✔✔sequence of steps used to record and report business transactions
fiscal year - ✔✔any consecutive, 12 month period that a business adopts its accounting year
revenue recognition principle - ✔✔recording revenues hen they are earned by providing goods
or services to customers
matching principle - ✔✔recording expenses in the time period they were incurred to produce
revenues, thus matching them against rev. earned during that same period.
cash-basis accounting - ✔✔records revenues when cash is received and expenses when cash is
paid
accruals - ✔✔revenues earned or expenses incurred before cash has been exchanged
deferrals - ✔✔cash received or paid before revenues have been earned or expenses have been
incurred
Questions
financial accounting - ✔✔process of recognizing, measuring, recording, and reporting info
about a businesses transactions to stakeholders outside the business.
GAAP - ✔✔Generally Accepting Accounting Principals. Rules and concepts established by the
accounting profession. (created by FASB)
business entity principle - ✔✔dictates that the financial affairs of a business org must be kept
separate from the personal finance affairs of the owners.
reliability principle - ✔✔requires info to be verifiable, confirmable by any independent
observer, also called objectivity.
cost principle - ✔✔when a business acquires assets or services, they should be recorded at
their actual cost. Historical cost.
cash accounting - ✔✔recognizes transactions only when cash is received or disbursed
accrual accounting - ✔✔recognizes a transaction when it occurs, not when cash is rec. or
disbursed.
common stock - ✔✔stockholders equity that is the result of the owners of the business
investing money (or other assets) into the business
retained earnings - ✔✔stokholders equity that is the result of the bus. having net income, or
net earnings, that have been retained in the business.
,accounts payable - ✔✔liability incurred by a business when purchasing goods or services
note payable - ✔✔liability represented by written promise that requires future payment
income statement - ✔✔fin. statement that reports that revenue and expense of a business
during a given period of time
statement of retained earnings - ✔✔reports the amount of accumulated net profits a business
has retained and not paid in dividends since inception. Beginning balance, plus net income or
minus net loss in the given period, less the dividends, = retained earnings.
balance sheet - ✔✔reports the assets, liabilities, and stockholders equity of a bus. at a specific
point in time.
promissory note - ✔✔written pledge to pay a fixed amount of money at a later date
debit - ✔✔left side of any account. entry made on the left side.
credit - ✔✔right side of any account. entry made on the right side.
T-account - ✔✔informal account form used to summarize transactions, where the top of the T
holds the account title and the base divides the debit and credit sides of the account.
general journal - ✔✔the chronological accounting record of the transactions of a business.
journalize - ✔✔entering a transaction in a journal.
, general ledger - ✔✔accounting record summarizing, in accounts, the transactions of a business
and showing the resulting ending account balances.
compound journal entry - ✔✔journal entry that affects more than 2 accounts
balance - ✔✔diff. b/w an accounts total debit and total credit amounts; ending value.
trial balance - ✔✔list of all accounts of a business and their balances; its purpose is to verify
that the total debits=total credits
accounting cycle - ✔✔sequence of steps used to record and report business transactions
fiscal year - ✔✔any consecutive, 12 month period that a business adopts its accounting year
revenue recognition principle - ✔✔recording revenues hen they are earned by providing goods
or services to customers
matching principle - ✔✔recording expenses in the time period they were incurred to produce
revenues, thus matching them against rev. earned during that same period.
cash-basis accounting - ✔✔records revenues when cash is received and expenses when cash is
paid
accruals - ✔✔revenues earned or expenses incurred before cash has been exchanged
deferrals - ✔✔cash received or paid before revenues have been earned or expenses have been
incurred
