Accounting Exam 1 Ch 1-3 Questions And Correct Answers
Accounting Equation - ✔✔ Assets= Liabilities+Owner's Equity
Assets=Liabilites+Common Stock-Dividends+Revenues-Expenses
Accrual Basis Accounting - ✔✔ uses the adjusting process to recognize revenues when earned and
expenses when incurred (GAAP accepted)
Accruals - ✔✔ cash comes LAST
Accrued Expenses - ✔✔ Cr (increase) liability
Dr (increase) expense
-costs that are incurred in a period but are both unpaid and unrecorded
Accrued Interest - ✔✔ principal amount owed x annual interest rate x fraction of year since last
payment date
Accrued Revenue - ✔✔ Dr (increase) asset
Cr (increase) revenue
-revenues earned in a period that are both unearned and not yet received in cash
Adjusted Trial Balance - ✔✔ a list of accounts and balances prepared after adjusting entries have
been recorded and posted to the ledger
Adjusting Entry - ✔✔ made at the end of an accounting period to reflect a transaction or event that is
not yet recorded
Analyzing Transactions - ✔✔ 1- identify the transaction and any source documents
2- analyze the transaction using the accounting equation
3- record the transaction in journal entry form applying double entry accounting
, 4- post the entry
Asset Accounts - ✔✔ cash
accounts receivable
note receivable
prepaid accounts
supplies accounts
equipment accounts
building accounts
land
Balance Sheet - ✔✔ describes a company's financial position at a point in time
-assets
-liabilities
-equity
Business Entity Assumption - ✔✔ a business is accounted for separately from other business entities,
including its owner
Cash Basis Accounting - ✔✔ recognized revenues when cash is received and records expenses when
cash is paid
Chart of Accounts - ✔✔ a list of all ledger accounts
Classified Balance Sheet - ✔✔ organizes assets and liabilities into important subgroups that provide
more information to decision makers
Closing Process - ✔✔ at the end of an accounting period AFTER financial statements have been
completed
1- close income statement credit balances
Accounting Equation - ✔✔ Assets= Liabilities+Owner's Equity
Assets=Liabilites+Common Stock-Dividends+Revenues-Expenses
Accrual Basis Accounting - ✔✔ uses the adjusting process to recognize revenues when earned and
expenses when incurred (GAAP accepted)
Accruals - ✔✔ cash comes LAST
Accrued Expenses - ✔✔ Cr (increase) liability
Dr (increase) expense
-costs that are incurred in a period but are both unpaid and unrecorded
Accrued Interest - ✔✔ principal amount owed x annual interest rate x fraction of year since last
payment date
Accrued Revenue - ✔✔ Dr (increase) asset
Cr (increase) revenue
-revenues earned in a period that are both unearned and not yet received in cash
Adjusted Trial Balance - ✔✔ a list of accounts and balances prepared after adjusting entries have
been recorded and posted to the ledger
Adjusting Entry - ✔✔ made at the end of an accounting period to reflect a transaction or event that is
not yet recorded
Analyzing Transactions - ✔✔ 1- identify the transaction and any source documents
2- analyze the transaction using the accounting equation
3- record the transaction in journal entry form applying double entry accounting
, 4- post the entry
Asset Accounts - ✔✔ cash
accounts receivable
note receivable
prepaid accounts
supplies accounts
equipment accounts
building accounts
land
Balance Sheet - ✔✔ describes a company's financial position at a point in time
-assets
-liabilities
-equity
Business Entity Assumption - ✔✔ a business is accounted for separately from other business entities,
including its owner
Cash Basis Accounting - ✔✔ recognized revenues when cash is received and records expenses when
cash is paid
Chart of Accounts - ✔✔ a list of all ledger accounts
Classified Balance Sheet - ✔✔ organizes assets and liabilities into important subgroups that provide
more information to decision makers
Closing Process - ✔✔ at the end of an accounting period AFTER financial statements have been
completed
1- close income statement credit balances
