Accounting Exam 1 (McGraw Hill
Chapters 1-5)
Accounting Equity - ✔️✔️An obligation to provide economic resources which are
specific to the entity and can be measured
Accounting Period - ✔️✔️A period of time covered by an accounting report month,
quarter, year
Balance Sheet - ✔️✔️Reports financial position at point in time Assets, Liabilities,
Stockholder's equity
Basic Accounting Equation - ✔️✔️Assets = Liabilities + Stockholders' Equity
Accounting Definition - ✔️✔️Accounting is a system that collects and processes
(analyzes, measures, and records) financial information about an organization and
reports that information to decision makers. Financial accounting involves preparation of
the four basic financial statements and related disclosures for external decision makers
GAAP - ✔️✔️Generally Accepted Accounting Principles.:The standards and rules that
accountants follow while recording and reporting financial activities.
Income Statement - ✔️✔️The purpose of the income statement is to present
information about the revenues, expenses, and the net income of the entity for a
specified period of time
Statement of cash flows - ✔️✔️The purpose of the statement of cash flows is to
present information about the flow of cash into the entity (sources), the flow of cash out
of the entity (uses), and the net increase or decrease in cash during the period
Statement of Stockholder's Equity - ✔️✔️The statement of stockholders' equity reports
the changes in each of the company's stockholders' equity accounts during the
accounting period including issue and repurchase of stock and the way that net income
and distribution of dividends affected the retained earnings of the company during that
period
Account - ✔️✔️A record that summarizes all the transactions pertaining to a single item
in the accounting equation
Common Stock - ✔️✔️Term used to describe the total amount paid in by stockholders
for the shares they purchase.
Chapters 1-5)
Accounting Equity - ✔️✔️An obligation to provide economic resources which are
specific to the entity and can be measured
Accounting Period - ✔️✔️A period of time covered by an accounting report month,
quarter, year
Balance Sheet - ✔️✔️Reports financial position at point in time Assets, Liabilities,
Stockholder's equity
Basic Accounting Equation - ✔️✔️Assets = Liabilities + Stockholders' Equity
Accounting Definition - ✔️✔️Accounting is a system that collects and processes
(analyzes, measures, and records) financial information about an organization and
reports that information to decision makers. Financial accounting involves preparation of
the four basic financial statements and related disclosures for external decision makers
GAAP - ✔️✔️Generally Accepted Accounting Principles.:The standards and rules that
accountants follow while recording and reporting financial activities.
Income Statement - ✔️✔️The purpose of the income statement is to present
information about the revenues, expenses, and the net income of the entity for a
specified period of time
Statement of cash flows - ✔️✔️The purpose of the statement of cash flows is to
present information about the flow of cash into the entity (sources), the flow of cash out
of the entity (uses), and the net increase or decrease in cash during the period
Statement of Stockholder's Equity - ✔️✔️The statement of stockholders' equity reports
the changes in each of the company's stockholders' equity accounts during the
accounting period including issue and repurchase of stock and the way that net income
and distribution of dividends affected the retained earnings of the company during that
period
Account - ✔️✔️A record that summarizes all the transactions pertaining to a single item
in the accounting equation
Common Stock - ✔️✔️Term used to describe the total amount paid in by stockholders
for the shares they purchase.
