ACCY 201 OLE MISS MCILWAIN FINAL EXAM
financial accounting - Answer -focuses on the needs to external users
managerial accounting - Answer -focuses on the needs of internal users
external users - Answer -do not directly run the organization and have limited access to
its accounting information
internal users - Answer -directly manage the organization
internal controls - Answer -procedures to protect assets, ensure reliable accounting,
promote efficiency, and uphold company policies
GAAP - Answer -Generally Accepted Accounting Principles
SEC - Answer -securities and exchange commission
measurement principle (historical cost) - Answer -you must record how it happened
revenue recognition principle - Answer -revenue is recognized when:
1. goods or services are provided to customers AND
2. at the amount expected to be received from the customer
expense recognition principle - Answer -must match expense to revenue
full disclosure principle - Answer -if the information would change a reasonable persons
mind, you must tell them about it
going-concern assumption - Answer -assume the business will continue operating as
normal
monetary unit assumption - Answer -Transactions and events are expressed in
monetary, or money, units.
time period assumption - Answer -the life of a company can be divided into time
periods, such as months and years
business entity assumption - Answer -A business is accounted for separately from
other business entities, including its owner.
assets - Answer -resources a company owns or controls
liabilities - Answer -creditors' claims on assets
, equity - Answer -the owner's claims to the assets of the business
expanded accounting equation - Answer -Assets = Liabilities + common stock -
dividends + revenues - expenses
common stock - Answer -inflows of cash and other net assets from shareholders in
exchange for stock
dividends - Answer -outflows of cash and other assets to shareholders that reduce
equity
revenues - Answer -increase equity (via net income) from sales of products and
services to customers
expenses - Answer -decrease equity (via net income) from costs of providing products
and services to customers.
3 legged stool for fraud - Answer -1. opportunity
2. pressure
3. rationalization
4 financial statements - Answer -1. income statement
2. statement of retained earnings
3. balance sheet
4. statement of cash flows
retained earnings = - Answer -beginning retained earnings
- net income
+ dividends
= ending retained earnings (goes on balance sheet)
accrual basis accounting - Answer -records revenues when services and products are
delivered and records expenses when incurred (matched with revenues)
cash basis accounting - Answer -records revenues when cash is received and records
expenses when cash is paid. cash receipts minus cash payments
adjusting entry - Answer -made at the end of an accounting period and reflects a
transaction or event that is not yet recorded.
prepaid expenses (deferred expenses) - Answer -assets paid for in advance of
receiving their benefits. when these assets are used, those advance payments become
expenses.
plant assets - Answer -long-term tangible assets used to produce and sell products and
services
financial accounting - Answer -focuses on the needs to external users
managerial accounting - Answer -focuses on the needs of internal users
external users - Answer -do not directly run the organization and have limited access to
its accounting information
internal users - Answer -directly manage the organization
internal controls - Answer -procedures to protect assets, ensure reliable accounting,
promote efficiency, and uphold company policies
GAAP - Answer -Generally Accepted Accounting Principles
SEC - Answer -securities and exchange commission
measurement principle (historical cost) - Answer -you must record how it happened
revenue recognition principle - Answer -revenue is recognized when:
1. goods or services are provided to customers AND
2. at the amount expected to be received from the customer
expense recognition principle - Answer -must match expense to revenue
full disclosure principle - Answer -if the information would change a reasonable persons
mind, you must tell them about it
going-concern assumption - Answer -assume the business will continue operating as
normal
monetary unit assumption - Answer -Transactions and events are expressed in
monetary, or money, units.
time period assumption - Answer -the life of a company can be divided into time
periods, such as months and years
business entity assumption - Answer -A business is accounted for separately from
other business entities, including its owner.
assets - Answer -resources a company owns or controls
liabilities - Answer -creditors' claims on assets
, equity - Answer -the owner's claims to the assets of the business
expanded accounting equation - Answer -Assets = Liabilities + common stock -
dividends + revenues - expenses
common stock - Answer -inflows of cash and other net assets from shareholders in
exchange for stock
dividends - Answer -outflows of cash and other assets to shareholders that reduce
equity
revenues - Answer -increase equity (via net income) from sales of products and
services to customers
expenses - Answer -decrease equity (via net income) from costs of providing products
and services to customers.
3 legged stool for fraud - Answer -1. opportunity
2. pressure
3. rationalization
4 financial statements - Answer -1. income statement
2. statement of retained earnings
3. balance sheet
4. statement of cash flows
retained earnings = - Answer -beginning retained earnings
- net income
+ dividends
= ending retained earnings (goes on balance sheet)
accrual basis accounting - Answer -records revenues when services and products are
delivered and records expenses when incurred (matched with revenues)
cash basis accounting - Answer -records revenues when cash is received and records
expenses when cash is paid. cash receipts minus cash payments
adjusting entry - Answer -made at the end of an accounting period and reflects a
transaction or event that is not yet recorded.
prepaid expenses (deferred expenses) - Answer -assets paid for in advance of
receiving their benefits. when these assets are used, those advance payments become
expenses.
plant assets - Answer -long-term tangible assets used to produce and sell products and
services
