ACC 200 EXAM VERIFIED STUDY GUIDE
account payable - Answers - a liability backed by the general reputation and credit
standing at the debtor.
accounting - Answers - the information system that measures business activities,
processes that information into reports and financial statements, and communicates the
results to decision makers.
accounting equation - Answers - assets=liabilities+owners equity
asset - Answers - an economic resource that is expected to be of benefit in the future.
balance sheet - Answers - 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 - Answers - group elected by the stockholders to set policy for a
corporation and to appoint its officers.
capital - Answers - another name for the owner's equity of a business
cash - Answers - money and any medium of exchange that a bank accepts at face
value.
common stock - Answers - the most basic form of capital stock.
continuity (going concern) assumption - Answers - holds that the entity will remain in
operation for the foreseeable future.
corporation - Answers - a business owned by stockholders. It is a legal entity, an
"artificial person" in the eyes of the law.
current asset - Answers - 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 - Answers - 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 - Answers - negative balance in retained earnings caused by net losses over a
period of years.
dividends - Answers - distributions (usually cash) by a corporation to its stockholders.
, entity - Answers - 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 - Answers - decrease in retained earnings that results from operations; the
cost of doing business;opposite of revenues.
fair value - Answers - the amount that a business could sell an asses for, or the amount
that a business could pay to settle a liability.
financial accounting - Answers - the branch of accounting that provides information to
people outside the firm.
financial statements - Answers - business documents that report financial information
about a business entity to decision makers.
financial activities - Answers - activities that obtain from investors and creditors the cash
needed to launch and sustain the business; a section of the statement of cash flows.
fixed assets and plant assets - Answers - other names for property, plant, and
equipment.
GAAP - Answers - accounting guidelines, formulated by the Financial Standards Board,
that govern how accounting is practiced.
historical cost principle - Answers - principle that states that assets and services should
be recorded at their actual cost.
income statement - Answers - a financial statement listing an entity's revenues,
expenses, and net income or net loss for a specific period. Also called the statement of
operations.
IFRS - Answers - accounting guidelines, formulated by the international accounting
standards board.
investing activities - Answers - activities that increase or decrease the long-term assets
available to the business; a section of the statement of cash flows.
liability - Answers - an economic obligation (debt) payable to an individual or an
organization outside the business.
limited liability company - Answers - a business organization in which the business (not
the owner) is liable for the company's debts.
long term debt - Answers - a liability that falls due beyond one year form the date of the
financial statements.
account payable - Answers - a liability backed by the general reputation and credit
standing at the debtor.
accounting - Answers - the information system that measures business activities,
processes that information into reports and financial statements, and communicates the
results to decision makers.
accounting equation - Answers - assets=liabilities+owners equity
asset - Answers - an economic resource that is expected to be of benefit in the future.
balance sheet - Answers - 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 - Answers - group elected by the stockholders to set policy for a
corporation and to appoint its officers.
capital - Answers - another name for the owner's equity of a business
cash - Answers - money and any medium of exchange that a bank accepts at face
value.
common stock - Answers - the most basic form of capital stock.
continuity (going concern) assumption - Answers - holds that the entity will remain in
operation for the foreseeable future.
corporation - Answers - a business owned by stockholders. It is a legal entity, an
"artificial person" in the eyes of the law.
current asset - Answers - 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 - Answers - 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 - Answers - negative balance in retained earnings caused by net losses over a
period of years.
dividends - Answers - distributions (usually cash) by a corporation to its stockholders.
, entity - Answers - 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 - Answers - decrease in retained earnings that results from operations; the
cost of doing business;opposite of revenues.
fair value - Answers - the amount that a business could sell an asses for, or the amount
that a business could pay to settle a liability.
financial accounting - Answers - the branch of accounting that provides information to
people outside the firm.
financial statements - Answers - business documents that report financial information
about a business entity to decision makers.
financial activities - Answers - activities that obtain from investors and creditors the cash
needed to launch and sustain the business; a section of the statement of cash flows.
fixed assets and plant assets - Answers - other names for property, plant, and
equipment.
GAAP - Answers - accounting guidelines, formulated by the Financial Standards Board,
that govern how accounting is practiced.
historical cost principle - Answers - principle that states that assets and services should
be recorded at their actual cost.
income statement - Answers - a financial statement listing an entity's revenues,
expenses, and net income or net loss for a specific period. Also called the statement of
operations.
IFRS - Answers - accounting guidelines, formulated by the international accounting
standards board.
investing activities - Answers - activities that increase or decrease the long-term assets
available to the business; a section of the statement of cash flows.
liability - Answers - an economic obligation (debt) payable to an individual or an
organization outside the business.
limited liability company - Answers - a business organization in which the business (not
the owner) is liable for the company's debts.
long term debt - Answers - a liability that falls due beyond one year form the date of the
financial statements.
