Rutgers Introduction to Financial Accounting || || || || ||
Exam 1 with accurate detailed solutions || || || || ||
Three Basic Activities of Accounting - ✔✔identify, record, communicate
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Internal Users - ✔✔marketing, management, finance, human resources
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External Users - ✔✔investors and creditors
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Ethics - ✔✔standards of conduct by which one's actions are judged as right or wrong; fair or
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unfair; honest or dishonest || || ||
Generally Accepted Accounting Principles (GAAP) - ✔✔standards that are generally accepted
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and universally practiced
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Historical Cost Principle - ✔✔dictates that companies record assets at their cost
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Fair Value Principle - ✔✔states that assets and liabilities should be reported at fair value
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Monetary Unit Assumption - ✔✔requires that companies include accounting records only
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transaction data that can be expressed in fair terms of money || || || || || || || || || ||
Economic Entity Assumption - ✔✔requires that activities of the entity kept separate and distinct
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from the other activities of its owner and all other economic entities
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Forms of Business Ownership - ✔✔proprietorship, partnership, corporation
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, Proprietorship - ✔✔owned by one person; owner receives all profits and is responsible for all
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debts
Partnership - ✔✔owned by two or more persons; unlimited personal liability; partnership
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agreement
Corporation - ✔✔ownership divided into shares; separate legal entity organized under corp. law;
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limited liability
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Basic Accounting Equation - ✔✔Assets = Liabilities + Stockholder's Equity
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Transactions - ✔✔business's economic events recorded by accountants; external or internal
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Retained Earnings - ✔✔Revenues - Expenses - Dividends
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Financial Statements - ✔✔Income Statement; retained earnings; balance sheet; statement of cash
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flows
Income Statement - ✔✔reports profitability of the company's operations over a specific time
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Income Statement Format - ✔✔Revenues - Expenses = Net Income (Loss)
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Retained Earnings Statement - ✔✔reports the changes in retained earning for a specific period of
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time; same time period as income statement
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Balance Sheet - ✔✔reports assets, liabilities, and stockholder's equity at a specific date -> In that
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order
Exam 1 with accurate detailed solutions || || || || ||
Three Basic Activities of Accounting - ✔✔identify, record, communicate
|| || || || || || || ||
Internal Users - ✔✔marketing, management, finance, human resources
|| || || || || || ||
External Users - ✔✔investors and creditors
|| || || || ||
Ethics - ✔✔standards of conduct by which one's actions are judged as right or wrong; fair or
|| || || || || || || || || || || || || || || || ||
unfair; honest or dishonest || || ||
Generally Accepted Accounting Principles (GAAP) - ✔✔standards that are generally accepted
|| || || || || || || || || || ||
and universally practiced
|| ||
Historical Cost Principle - ✔✔dictates that companies record assets at their cost
|| || || || || || || || || || ||
Fair Value Principle - ✔✔states that assets and liabilities should be reported at fair value
|| || || || || || || || || || || || || ||
Monetary Unit Assumption - ✔✔requires that companies include accounting records only
|| || || || || || || || || || ||
transaction data that can be expressed in fair terms of money || || || || || || || || || ||
Economic Entity Assumption - ✔✔requires that activities of the entity kept separate and distinct
|| || || || || || || || || || || || || ||
from the other activities of its owner and all other economic entities
|| || || || || || || || || || ||
Forms of Business Ownership - ✔✔proprietorship, partnership, corporation
|| || || || || || ||
, Proprietorship - ✔✔owned by one person; owner receives all profits and is responsible for all
|| || || || || || || || || || || || || || ||
debts
Partnership - ✔✔owned by two or more persons; unlimited personal liability; partnership
|| || || || || || || || || || || ||
agreement
Corporation - ✔✔ownership divided into shares; separate legal entity organized under corp. law;
|| || || || || || || || || || || || ||
limited liability
||
Basic Accounting Equation - ✔✔Assets = Liabilities + Stockholder's Equity
|| || || || || || || || ||
Transactions - ✔✔business's economic events recorded by accountants; external or internal
|| || || || || || || || || ||
Retained Earnings - ✔✔Revenues - Expenses - Dividends
|| || || || || || ||
Financial Statements - ✔✔Income Statement; retained earnings; balance sheet; statement of cash
|| || || || || || || || || || || ||
flows
Income Statement - ✔✔reports profitability of the company's operations over a specific time
|| || || || || || || || || || || ||
Income Statement Format - ✔✔Revenues - Expenses = Net Income (Loss)
|| || || || || || || || || ||
Retained Earnings Statement - ✔✔reports the changes in retained earning for a specific period of
|| || || || || || || || || || || || || || ||
time; same time period as income statement
|| || || || || ||
Balance Sheet - ✔✔reports assets, liabilities, and stockholder's equity at a specific date -> In that
|| || || || || || || || || || || || || || || ||
order
