C928 - WGU IT Finance (Glossary Terms) questions
with verified answers
account payable Ans✓✓✓ The liability created by a purchase on account.
account receivable Ans✓✓✓ A claim against the customer created by selling
merchandise or services on credit. This item is shown on the Balance Sheet.
accounting assumptions Ans✓✓✓ Assumptions that provide the framework upon
which accounting standards are constructed.
accounting Ans✓✓✓ An information system that provides reports to users about
the economic activities and condition of a business.
accounting cycle Ans✓✓✓ The process that begins with analyzing and
journalizing transactions and ends with the post-closing trial balance.
accounting equation Ans✓✓✓ Assets = Liabilities + Stockholder's Equity.
accounting principles Ans✓✓✓ Principles that provide the framework upon
which accounting standards are constructed.
accounting standards Ans✓✓✓ The rules that determine the accounting for
individual business transactions.
accounts payable subsidiary ledger (Lesson 5) Ans✓✓✓ The subsidiary ledger
containing the individual accounts with creditors (suppliers).
,accounts receivable analysis Ans✓✓✓ A company's ability to collect its accounts
receivable.
accounts receivable subsidiary ledger (Lesson 5) Ans✓✓✓ The subsidiary ledger
containing the individual accounts with customers.
accumulated other comprehensive income Ans✓✓✓ The cumulative effects of
other comprehensive income items reported separately in the Stockholders'
Equity section of the balance sheet.
administrative expenses (general expenses) (Lesson 5) Ans✓✓✓ Expenses
incurred in the administration or general operations of the business.
analytical methods Ans✓✓✓ Methods that examine changes in the amount and
percentage of financial statement items within and across periods.
arm's-length transactions Ans✓✓✓ Transactions between two independent
parties.
asset turnover ratio (Lesson 5) Ans✓✓✓ A ratio that measures how effectively a
business is using its assets to generate sales, computed as sales divided by
average total assets.
assets Ans✓✓✓ The resources owned by a business.
,average rate of return (Lesson 11) Ans✓✓✓ A method of evaluating capital
investment proposals that focuses on the expected profitability of the
investment.
balance sheet Ans✓✓✓ A list of the assets, liabilities, and stockholders' equity as
of a specific date, usually at the close of the last day of a month or a year.
balanced scorecard (Lesson 10) Ans✓✓✓ A performance evaluation approach
that incorporates multiple performance dimensions by combining financial and
nonfinancial measures.
budget (Lesson 8) Ans✓✓✓ An accounting device used to plan and control
resources of operational departments and divisions.
budgetary slack (Lesson 8) Ans✓✓✓ Excess resources set within a budget to
provide for uncertain events.
business Ans✓✓✓ An organization in which basic resources (inputs), such as
materials and labor, are assembled and processed to provide goods or services
(outputs) to customers.
business entity assumption Ans✓✓✓ A concept of accounting that limits the
economic data in the accounting system to data related directly to the activities of
the business.
business transaction Ans✓✓✓ An economic event or condition that directly
changes an entity's financial condition or directly affects its results of operations.
, capital expenditures budget (Lesson 8) Ans✓✓✓ The budget summarizing future
plans for acquiring plant facilities and equipment.
capital investment analysis (Lesson 11) Ans✓✓✓ The process by which
management plans, evaluates, and controls long-term capital investments
involving property, plant, and equipment.
capital rationing (Lesson 11) Ans✓✓✓ The process by which management plans,
evaluates, and controls long-term capital investments involving fixed assets.
cash budget (Lesson 8) Ans✓✓✓ A budget of estimated cash receipts and
payments.
cash flow per share Ans✓✓✓ Normally computed as cash flow from operations
per share.
cash flows from financing activities Ans✓✓✓ The section of the statement of
cash flows that reports cash flows from transactions affecting the equity and debt
of the business.
cash flows from investing activities Ans✓✓✓ The section of the statement of
cash flows that reports cash flows from transactions affecting investments in
noncurrent assets.
cash flows from operating activities Ans✓✓✓ The section of the statement of
cash flows that reports the cash transactions affecting the determination of net
income.
with verified answers
account payable Ans✓✓✓ The liability created by a purchase on account.
account receivable Ans✓✓✓ A claim against the customer created by selling
merchandise or services on credit. This item is shown on the Balance Sheet.
accounting assumptions Ans✓✓✓ Assumptions that provide the framework upon
which accounting standards are constructed.
accounting Ans✓✓✓ An information system that provides reports to users about
the economic activities and condition of a business.
accounting cycle Ans✓✓✓ The process that begins with analyzing and
journalizing transactions and ends with the post-closing trial balance.
accounting equation Ans✓✓✓ Assets = Liabilities + Stockholder's Equity.
accounting principles Ans✓✓✓ Principles that provide the framework upon
which accounting standards are constructed.
accounting standards Ans✓✓✓ The rules that determine the accounting for
individual business transactions.
accounts payable subsidiary ledger (Lesson 5) Ans✓✓✓ The subsidiary ledger
containing the individual accounts with creditors (suppliers).
,accounts receivable analysis Ans✓✓✓ A company's ability to collect its accounts
receivable.
accounts receivable subsidiary ledger (Lesson 5) Ans✓✓✓ The subsidiary ledger
containing the individual accounts with customers.
accumulated other comprehensive income Ans✓✓✓ The cumulative effects of
other comprehensive income items reported separately in the Stockholders'
Equity section of the balance sheet.
administrative expenses (general expenses) (Lesson 5) Ans✓✓✓ Expenses
incurred in the administration or general operations of the business.
analytical methods Ans✓✓✓ Methods that examine changes in the amount and
percentage of financial statement items within and across periods.
arm's-length transactions Ans✓✓✓ Transactions between two independent
parties.
asset turnover ratio (Lesson 5) Ans✓✓✓ A ratio that measures how effectively a
business is using its assets to generate sales, computed as sales divided by
average total assets.
assets Ans✓✓✓ The resources owned by a business.
,average rate of return (Lesson 11) Ans✓✓✓ A method of evaluating capital
investment proposals that focuses on the expected profitability of the
investment.
balance sheet Ans✓✓✓ A list of the assets, liabilities, and stockholders' equity as
of a specific date, usually at the close of the last day of a month or a year.
balanced scorecard (Lesson 10) Ans✓✓✓ A performance evaluation approach
that incorporates multiple performance dimensions by combining financial and
nonfinancial measures.
budget (Lesson 8) Ans✓✓✓ An accounting device used to plan and control
resources of operational departments and divisions.
budgetary slack (Lesson 8) Ans✓✓✓ Excess resources set within a budget to
provide for uncertain events.
business Ans✓✓✓ An organization in which basic resources (inputs), such as
materials and labor, are assembled and processed to provide goods or services
(outputs) to customers.
business entity assumption Ans✓✓✓ A concept of accounting that limits the
economic data in the accounting system to data related directly to the activities of
the business.
business transaction Ans✓✓✓ An economic event or condition that directly
changes an entity's financial condition or directly affects its results of operations.
, capital expenditures budget (Lesson 8) Ans✓✓✓ The budget summarizing future
plans for acquiring plant facilities and equipment.
capital investment analysis (Lesson 11) Ans✓✓✓ The process by which
management plans, evaluates, and controls long-term capital investments
involving property, plant, and equipment.
capital rationing (Lesson 11) Ans✓✓✓ The process by which management plans,
evaluates, and controls long-term capital investments involving fixed assets.
cash budget (Lesson 8) Ans✓✓✓ A budget of estimated cash receipts and
payments.
cash flow per share Ans✓✓✓ Normally computed as cash flow from operations
per share.
cash flows from financing activities Ans✓✓✓ The section of the statement of
cash flows that reports cash flows from transactions affecting the equity and debt
of the business.
cash flows from investing activities Ans✓✓✓ The section of the statement of
cash flows that reports cash flows from transactions affecting investments in
noncurrent assets.
cash flows from operating activities Ans✓✓✓ The section of the statement of
cash flows that reports the cash transactions affecting the determination of net
income.
