Intro To Financial Accounting Exam 1 Questions And Answers

Intro To Financial Accounting Exam 1
Questions And Answers

Standard Setting Bodies Financial Accounting Standards Board (FASB)


(SEC)

International Accounting Standards Board

(IASB)




Historical Cost Principle dictates that companies record assets at their cost.




Fair Value Principle states that assets and liabilities should be reported at a fair value




Monetary Unit Assumption companies include in accounting records only transaction data

expressed in money.




Economic Entity Assumption Requires that activities of the entity be kept separate and

distinct from activities of the owner




Combining activities of Kellogg and General Mills would violate? Economic Entity

Assumption

, Intro To Financial Accounting Exam 1
Questions And Answers

Corporation Ownership divided into shares of stock




Accounting Equation Assets= Liabilities + Stockholder's Equity




Assets Resources a business owns


Provide future service or benefits

Cash, Supplies, Equipment




Liabilities Claims against assets (Debts and Obligations)


Creditors- Party to whom money is owed

Accounts Payable, Notes Payable




Stockholder's Equity Ownership claim on total Assets


Referred to as residual Equity

Common Stock and Retained Earnings