PACE Exam Review
Accounting Cycle - ANS-a methodical way of recording and summarizing a firms transactions
and events for a period of time
Accrual Basis Accounting - ANS-revenue is recognized when earned, not necessarily when
cash is received and expenses are recognized when incurred, not necessarily when cash is
paid out
Accruals - ANS-expenses that have been incurred but not yet paid, revenues that have been
earned but not yet received
Assets - ANS-measurable resources of a firm
Balance Sheet - ANS-reports a firms assets, liabilities, and stockholders equity at a point in time
Cash Basis Accounting - ANS-revenue is recognized when cash is received and expenses are
recognized when cash is paid out
Cost of Goods Sold - ANS-the cost or expense of inventory sold during the period
Deferrals - ANS-expenses that have been paid but not yet incurred, revenues that have been
received but not yet earned
Dividends ___ RE - ANS-decrease
Expenses - ANS-costs incurred to generate the revenues
Financial Accounting - ANS-used in preparing general purpose financial statements such as
income statements, retained earnings statements, balance sheets, and statement of cash flows
Income Statement - ANS-reports a firms profitability for a period of time as measured by the
excess of revenues over expenses
Journal - ANS-a chronological record of transactions
Liabilities - ANS-obligations owed by a firm to third parties
Net Income ___ RE - ANS-increases
Net Loss ___ RE - ANS-decreases
Normal Balance: Asset - ANS-debit
Normal Balance: Expenses - ANS-debit
Normal Balance: Liability - ANS-credit
Normal Balance: Revenues - ANS-credit
Normal Balance: Stockholders Equity - ANS-credit
Retained Earnings Statement - ANS-reconciles the beginning balance of RE for the period to
the ending balance of RE for the period
Revenues - ANS-increases in net assets resulting from sales of goods or services
Sales Allowance - ANS-a deduction from the original invoice price granted to the customer for a
variety of reasons
Sales Discount - ANS-when goods are sold on account and sellers may offer a cash discount to
induce early payment
Sales Returns - ANS-merchandise returned by the buyer and considered a cancellation of the
sale
Sales Transactions - ANS-revenue is recognized at the point of sale
Accounting Cycle - ANS-a methodical way of recording and summarizing a firms transactions
and events for a period of time
Accrual Basis Accounting - ANS-revenue is recognized when earned, not necessarily when
cash is received and expenses are recognized when incurred, not necessarily when cash is
paid out
Accruals - ANS-expenses that have been incurred but not yet paid, revenues that have been
earned but not yet received
Assets - ANS-measurable resources of a firm
Balance Sheet - ANS-reports a firms assets, liabilities, and stockholders equity at a point in time
Cash Basis Accounting - ANS-revenue is recognized when cash is received and expenses are
recognized when cash is paid out
Cost of Goods Sold - ANS-the cost or expense of inventory sold during the period
Deferrals - ANS-expenses that have been paid but not yet incurred, revenues that have been
received but not yet earned
Dividends ___ RE - ANS-decrease
Expenses - ANS-costs incurred to generate the revenues
Financial Accounting - ANS-used in preparing general purpose financial statements such as
income statements, retained earnings statements, balance sheets, and statement of cash flows
Income Statement - ANS-reports a firms profitability for a period of time as measured by the
excess of revenues over expenses
Journal - ANS-a chronological record of transactions
Liabilities - ANS-obligations owed by a firm to third parties
Net Income ___ RE - ANS-increases
Net Loss ___ RE - ANS-decreases
Normal Balance: Asset - ANS-debit
Normal Balance: Expenses - ANS-debit
Normal Balance: Liability - ANS-credit
Normal Balance: Revenues - ANS-credit
Normal Balance: Stockholders Equity - ANS-credit
Retained Earnings Statement - ANS-reconciles the beginning balance of RE for the period to
the ending balance of RE for the period
Revenues - ANS-increases in net assets resulting from sales of goods or services
Sales Allowance - ANS-a deduction from the original invoice price granted to the customer for a
variety of reasons
Sales Discount - ANS-when goods are sold on account and sellers may offer a cash discount to
induce early payment
Sales Returns - ANS-merchandise returned by the buyer and considered a cancellation of the
sale
Sales Transactions - ANS-revenue is recognized at the point of sale
