Financial Accounting Exam 1 All Questions And Verified Detailed
Answers A+ Graded 100% Pass Guaranteed
Balance Sheet - ANSWER the financial statement that reports assets, liabilities and
owner's equity at a particular point in time.
Income Statement - ANSWER a financial statement that presents revenues and
expenses for fiscal period. Revenues - expenses = net income
Income Summary Account - ANSWER the account used to accumulate and summarize
revenues and expenses for the period.
Trial Balance - ANSWER a listing of accounts and their balances at a point in time
Statement of Cash Flows - ANSWER A financial statement that presents financial
information about the cash receipts and cash payments of a business during a specific
period of time.
permanent accounts - ANSWER all accounts that appear in the balance sheet; account
balances are carried forward from one period to the next
temporary accounts - ANS Revenue, expense, and dividend accounts whose balances a
company transfers to Retained Earnings at the end of an accounting period.
Business entity assumption - ANS A business is accounted for separately from other
business entities, including its owner.
Time period assumption - ANS Assumption that an organization's activities can be
divided into specific time periods such as months, quarters, or years.
,Revenue recognition principle - ANSWER The principle that companies recognize
revenue in the accounting period in which the performance obligation is satisfied.
Going Concern Assumption - ANSWER The assumption that the company will continue in
operation for the foreseeable future.
Asset Accounts - ANSWER You own, examples include: cash, accounts receivable,
notes receivable, prepaid accounts, supplies, equipment, buildings, land
Liability accounts - ANSWER You owe, Examples include: accounts payable, notes
payable, accrued liabilities, unearned revenue
Shareholders equity accounts - ANSWER Assets - common stock and retained earnings
Closing entries - ANSWER Entries that transfer the balances of all temporary accounts
(revenues, expenses, and dividends) to the balance of the Retained Earnings account
Adjusting entries - ANSWER journal entries recorded to update general ledger accounts
at the end of a fiscal period
Monetary unit assumption - ANSWER An assumption that requires that only those things
that can be expressed in money are included in the accounting records.
Measurement (cost) principle - ANSWER Accounting information is based on actual
cost. Actual cost is considered objective.
Corporation - ANSWER A business owned by stockholders who share in its profits but
are not personally responsible for its debts
proprietorship - ANSWER an organization owned and operated by an individual
,limited liability company - ANSWER A business entity in which the business itself (not the
owner) assumes liability for the company's debt
Partnership - ANSWER a business organization owned by two or more individuals who
agree on a specific division of responsibilities and profit
FASB - ANSWER Financial Accounting Standards Board, is the private sector body
given the primary responsibility to work out the detailed rules that become GAAP.
IASB - ANSWER International Accounting Standards Board --- sets accounting
standards in the rest of the world.
Securities and Exchange Commission (SEC) - ANSWER The agency of the U.S.
government that oversees U.S. financial markets and accounting standard-setting
bodies.
GAAP - ANS Commonly referred to as Generally Accepted Accounting Principles. The
rules and boundaries that accountants follow when reporting and recording financial
events.
Unearned Revenue - ANS A liability created when the business receives cash from
customers in advance of performing services or delivering goods.
prepaid expenses - ANS expenses paid in cash in advance of being used or consumed
accumulated depreciation - ANS A contra asset account that reflects the total amount of
depreciation taken to date.
Balance Column Account - ANSWER An account that contains both debit and credit
columns for the purpose of recording entries and also has a column to show the balance
of the account after each entry.
, Double entry accounting - ANSWER A system of recording the debit and credit parts of
transaction
T account - ANSWER Tool used to show the effects of transactions and events on
individual accounts; shaped in the form of a T. Debits on the left side and Credits on the
right.
Accrual basis accounting - ANSWER reporting income when it is earned and expenses
when they are incurred
Cash basis accounting - ANSWER Reporting income when the cash is received and
expenses when the cash is paid.
common stock - ANSWER the term for the total amount contributed by stockholders for
the shares that they purchase.
Managerial Accounting - ANSWER accounting used to provide information and analyses
to managers inside the organization to assist them in decision making
Expense Recognition Principle - ANSWER match expenses with revenues in the period
when the company makes efforts to generate those revenues
Full Disclosure Principle - ANSWER Accounting principle that dictates that companies
disclose circumstances and events that make a difference to financial statement users.
IFRS - ANSWER International Financial Reporting Standards A standardized set of rules
and practices in business accounting used in many countries as an alternative to US
GAAP.
Statement of Retained Earnings - ANSWER Reports the way that net income and the
distribution of dividends affected the financial position of the company during the
accounting period.
Answers A+ Graded 100% Pass Guaranteed
Balance Sheet - ANSWER the financial statement that reports assets, liabilities and
owner's equity at a particular point in time.
Income Statement - ANSWER a financial statement that presents revenues and
expenses for fiscal period. Revenues - expenses = net income
Income Summary Account - ANSWER the account used to accumulate and summarize
revenues and expenses for the period.
Trial Balance - ANSWER a listing of accounts and their balances at a point in time
Statement of Cash Flows - ANSWER A financial statement that presents financial
information about the cash receipts and cash payments of a business during a specific
period of time.
permanent accounts - ANSWER all accounts that appear in the balance sheet; account
balances are carried forward from one period to the next
temporary accounts - ANS Revenue, expense, and dividend accounts whose balances a
company transfers to Retained Earnings at the end of an accounting period.
Business entity assumption - ANS A business is accounted for separately from other
business entities, including its owner.
Time period assumption - ANS Assumption that an organization's activities can be
divided into specific time periods such as months, quarters, or years.
,Revenue recognition principle - ANSWER The principle that companies recognize
revenue in the accounting period in which the performance obligation is satisfied.
Going Concern Assumption - ANSWER The assumption that the company will continue in
operation for the foreseeable future.
Asset Accounts - ANSWER You own, examples include: cash, accounts receivable,
notes receivable, prepaid accounts, supplies, equipment, buildings, land
Liability accounts - ANSWER You owe, Examples include: accounts payable, notes
payable, accrued liabilities, unearned revenue
Shareholders equity accounts - ANSWER Assets - common stock and retained earnings
Closing entries - ANSWER Entries that transfer the balances of all temporary accounts
(revenues, expenses, and dividends) to the balance of the Retained Earnings account
Adjusting entries - ANSWER journal entries recorded to update general ledger accounts
at the end of a fiscal period
Monetary unit assumption - ANSWER An assumption that requires that only those things
that can be expressed in money are included in the accounting records.
Measurement (cost) principle - ANSWER Accounting information is based on actual
cost. Actual cost is considered objective.
Corporation - ANSWER A business owned by stockholders who share in its profits but
are not personally responsible for its debts
proprietorship - ANSWER an organization owned and operated by an individual
,limited liability company - ANSWER A business entity in which the business itself (not the
owner) assumes liability for the company's debt
Partnership - ANSWER a business organization owned by two or more individuals who
agree on a specific division of responsibilities and profit
FASB - ANSWER Financial Accounting Standards Board, is the private sector body
given the primary responsibility to work out the detailed rules that become GAAP.
IASB - ANSWER International Accounting Standards Board --- sets accounting
standards in the rest of the world.
Securities and Exchange Commission (SEC) - ANSWER The agency of the U.S.
government that oversees U.S. financial markets and accounting standard-setting
bodies.
GAAP - ANS Commonly referred to as Generally Accepted Accounting Principles. The
rules and boundaries that accountants follow when reporting and recording financial
events.
Unearned Revenue - ANS A liability created when the business receives cash from
customers in advance of performing services or delivering goods.
prepaid expenses - ANS expenses paid in cash in advance of being used or consumed
accumulated depreciation - ANS A contra asset account that reflects the total amount of
depreciation taken to date.
Balance Column Account - ANSWER An account that contains both debit and credit
columns for the purpose of recording entries and also has a column to show the balance
of the account after each entry.
, Double entry accounting - ANSWER A system of recording the debit and credit parts of
transaction
T account - ANSWER Tool used to show the effects of transactions and events on
individual accounts; shaped in the form of a T. Debits on the left side and Credits on the
right.
Accrual basis accounting - ANSWER reporting income when it is earned and expenses
when they are incurred
Cash basis accounting - ANSWER Reporting income when the cash is received and
expenses when the cash is paid.
common stock - ANSWER the term for the total amount contributed by stockholders for
the shares that they purchase.
Managerial Accounting - ANSWER accounting used to provide information and analyses
to managers inside the organization to assist them in decision making
Expense Recognition Principle - ANSWER match expenses with revenues in the period
when the company makes efforts to generate those revenues
Full Disclosure Principle - ANSWER Accounting principle that dictates that companies
disclose circumstances and events that make a difference to financial statement users.
IFRS - ANSWER International Financial Reporting Standards A standardized set of rules
and practices in business accounting used in many countries as an alternative to US
GAAP.
Statement of Retained Earnings - ANSWER Reports the way that net income and the
distribution of dividends affected the financial position of the company during the
accounting period.
