Accounting Equations Test Questions And Answers

Accounting Equations Test Questions And Answers Account - ANSWER- an accounting device used in summarizing the effects of transactions (increases/ decreases) on element of the financial statement. Chart of Accounts - ANSWER- a listing of all account titles used by an entity. Purpose of the Financial Statements? - ANSWER- to provide information about the financial position, financial performance and cash flows of an entity that is useful to a wide range of users in making economic decisions. Statement of Financial Position - ANSWER- summary statement of the firm's financial position at a given point in time. Income Statement (Statement of Financial Performance) - ANSWER- provides a financial summary of the firm's operating results during a specified period of time. Statement of Changes in Equity - ANSWER- show's all equity account transactions that occurred during a given period of time. Statement of Cash Flows - ANSWER- provides a summary of the firm's operating, investing and financing cash flows and reconciles them with changes in its cash and cash equivalent during a period of time. Notes to Financial Statements - ANSWER- explanatory notes keyed to relevant accounts in the statements; they provide detailed information on the accounting policies, procedures, calculations, and transactions underlying entries in the financial statements. Asset - ANSWER- A present economic resource controlled by the entity as a result of past events. Liability - ANSWER- A present obligation of the entity to transfer an economic resource as a result of past events. Equity - ANSWER- The residual interest in the assets of the entity after deducting all its liabilities. Income - ANSWER- Increases in assets, or decreases in liabilities, that result in increases in equity, other than those relating to contributions from holders of equity claims.