Accounting 201 Test Questions And Answers

Accounting 201 Test Questions And Answers Accounting - ANSWER- The art of recording, classifying, reporting, and interpreting the financial data of an organization. Accounting equation - ANSWER- An expression in dollar amounts of the equivalency of the assets and equities of an enterprise, stated as Assets=Liabilities+Owner's equity. Accounting principle - ANSWER- A broad rule adopted by the accounting profession as a guide in measuring, recording, and reporting the financial affairs and activities of a business. Account payable - ANSWER- A debt owed to a creditor for goods or services purchases on credit. Account receivable - ANSWER- An amount receivable from a debtor for goods or services sold on credit. Asset - ANSWER- A property or economic resource owned by an individual or enterprise. Balance sheet - ANSWER- A financial report showing the assets, liabilities, and owner's equity of an enterprise on a specefic date. Business entity concept - ANSWER- The idea that a business is separate and distinct from its owner or owners and from every other business. Capital stock - ANSWER- Ownership equity in a corporation resulting from the sale of shares of the corportion's stock to its stockholders. Continuing-concern concept - ANSWER- The idea that a business is a going concern that will continue to operate, using its assets to carry on its operation and, with the exception of merchandise, not offering the assets for sale. Corporation - ANSWER- A business incorporated under the laws of a state or other jurisdiction. Equity - ANSWER- A right, claim, or interest in property. Expense - ANSWER- Goods or services consumed in operating an enterprise. Income statement - ANSWER- A financial statement showing revenues earned by a business, the expenses incurred in earning the revenues, and the resulting net income or net loss. Liability - ANSWER- A debt owed. Net assets - ANSWER- Assets minus liablities. Net income - ANSWER- The excess of revenue over expenses. Net loss - ANSWER- The excess of expenses over revenues. Objectivity principle - ANSWER- The accounting rule requiring that wherever possible, the amounts used in recording transactions be based on objective evidence rather than on sujective arguments. Proprietorship - ANSWER- A sole owner of a business who is liable for all debt.