ACC 200 Exam1 Questions and Correct
Answers
accounting - Answer-the process of identifying, measuring and communicating economic information to
permit informed judgements and decisions
-the language of business
basic accounting formula - Answer-assets=liabilities + stockholders equity
stockholders equity - Answer-contributed capital + retained earnings
-contributed capital: reported on balance sheet
-common stock, contributed capital, RE, treasury stock
retained earnings - Answer-revenues- expenses- dividends
-reported on balance sheet and statement of RE
historic cost principle - Answer-record initially the activities of a company at cost
, -assets should be recorded and reported at the cost paid to acquire them
revenue recognition principle - Answer-revenue should be recorded when a resource has been earned
matching principle - Answer-expenses should be recorded in the period resources are used to generate
revenue
conservatism principle - Answer-avoids overstating assets or income in the preparation of financial
statements
full disclosure principle - Answer-reveal any info that makes a difference to financial statement users
economic entity assumption - Answer-financial activities of a business should be accounted for
separately from the business's owners
monetary unit assumption - Answer-organizations are to report their financial results and activities in
monetary units
time period assumption - Answer-divides the life of the organization into artificial time periods to report
results over short periods of time
going concern assumption (continuity) - Answer-the company for which we are accounting will continue
its operations into the foreseeable future
understandability - Answer-can be comprehended by someone with a reasonable knowledge of
business and finance
relevance - Answer-the capacity of accounting information to make a difference in decisions
Answers
accounting - Answer-the process of identifying, measuring and communicating economic information to
permit informed judgements and decisions
-the language of business
basic accounting formula - Answer-assets=liabilities + stockholders equity
stockholders equity - Answer-contributed capital + retained earnings
-contributed capital: reported on balance sheet
-common stock, contributed capital, RE, treasury stock
retained earnings - Answer-revenues- expenses- dividends
-reported on balance sheet and statement of RE
historic cost principle - Answer-record initially the activities of a company at cost
, -assets should be recorded and reported at the cost paid to acquire them
revenue recognition principle - Answer-revenue should be recorded when a resource has been earned
matching principle - Answer-expenses should be recorded in the period resources are used to generate
revenue
conservatism principle - Answer-avoids overstating assets or income in the preparation of financial
statements
full disclosure principle - Answer-reveal any info that makes a difference to financial statement users
economic entity assumption - Answer-financial activities of a business should be accounted for
separately from the business's owners
monetary unit assumption - Answer-organizations are to report their financial results and activities in
monetary units
time period assumption - Answer-divides the life of the organization into artificial time periods to report
results over short periods of time
going concern assumption (continuity) - Answer-the company for which we are accounting will continue
its operations into the foreseeable future
understandability - Answer-can be comprehended by someone with a reasonable knowledge of
business and finance
relevance - Answer-the capacity of accounting information to make a difference in decisions
