ACCOUNTING 200 EXAM 1 2025
QUESTIONS AND ANSWERS
Account payable - ANS a liability backed by the general reputation and credit standing at the
debtor.
accounting - ANS the information system that measures business activities, processes that
information into reports and financial statements, and communicates the results to decision
makers.
accounting equation - ANS assets=liabilities+owners equity
asset - ANS an economic resource that is expected to be of benefit in the future.
balance sheet - ANS list of an entity's assets, liabilities, and owner's equity as of a specific
date. also called the statement of financial position.
board of directors - ANS group elected by the stockholders to set policy for a corporation and
to appoint its officers.
capital - ANS another name for the owner's equity of a business
cash - ANS money and any medium of exchange that a bank accepts at face value.
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, common stock - ANS the most basic form of capital stock.
continuity (going concern) assumption - ANS holds that the entity will remain in operation
for the foreseeable future.
corporation - ANS a business owned by stockholders. It is a legal entity, an "artificial person"
in the eyes of the law.
current asset - ANS an asset that is expected to be converted to cash, sold, or consumed
during the next 12 months or within the business's normal operating cycle if longer than a year.
current liability - ANS a debt due to be paid within one year or within the entity's operating
cycle if the cycle is longer than a year.
deficit - ANS negative balance in retained earnings caused by net losses over a period of
years.
dividends - ANS distributions (usually cash) by a corporation to its stockholders.
entity - ANS an organization or a section of an organization that, for accounting purposes,
stands apart from other organizations and individuals as a separate economic unit.
expenses - ANS decrease in retained earnings that results from operations; the cost of doing
business;opposite of revenues.
fair value - ANS the amount that a business could sell an asses for, or the amount that a
business could pay to settle a liability.
Copyright ©2025 BRIGHTSTARS ALL RIGHTS RESERVED 2
QUESTIONS AND ANSWERS
Account payable - ANS a liability backed by the general reputation and credit standing at the
debtor.
accounting - ANS the information system that measures business activities, processes that
information into reports and financial statements, and communicates the results to decision
makers.
accounting equation - ANS assets=liabilities+owners equity
asset - ANS an economic resource that is expected to be of benefit in the future.
balance sheet - ANS list of an entity's assets, liabilities, and owner's equity as of a specific
date. also called the statement of financial position.
board of directors - ANS group elected by the stockholders to set policy for a corporation and
to appoint its officers.
capital - ANS another name for the owner's equity of a business
cash - ANS money and any medium of exchange that a bank accepts at face value.
Copyright ©2025 BRIGHTSTARS ALL RIGHTS RESERVED 1
, common stock - ANS the most basic form of capital stock.
continuity (going concern) assumption - ANS holds that the entity will remain in operation
for the foreseeable future.
corporation - ANS a business owned by stockholders. It is a legal entity, an "artificial person"
in the eyes of the law.
current asset - ANS an asset that is expected to be converted to cash, sold, or consumed
during the next 12 months or within the business's normal operating cycle if longer than a year.
current liability - ANS a debt due to be paid within one year or within the entity's operating
cycle if the cycle is longer than a year.
deficit - ANS negative balance in retained earnings caused by net losses over a period of
years.
dividends - ANS distributions (usually cash) by a corporation to its stockholders.
entity - ANS an organization or a section of an organization that, for accounting purposes,
stands apart from other organizations and individuals as a separate economic unit.
expenses - ANS decrease in retained earnings that results from operations; the cost of doing
business;opposite of revenues.
fair value - ANS the amount that a business could sell an asses for, or the amount that a
business could pay to settle a liability.
Copyright ©2025 BRIGHTSTARS ALL RIGHTS RESERVED 2
