ACTG 210 TEST WITH COMPLETE
SOLUTION
Accounting - ANSWER The process of keeping the financial score for the
entity
Revenue Recognition Principle - ANSWER EARNED: rendered goods and
services RECOGNIZED: expectation of payment
Matching Principle - ANSWER Matches expenses with revenue in the period
they occur
Materiality Principle - ANSWER If you knew the fact, it could change your
mind; 5% of something
Assets - ANSWER Something of future economic value. Not all are shown on
the balance sheet because they must be objectively quantifiable to be
recorded on the balance sheet
Liability - ANSWER Something owed. Not all liabilities are on the balance
sheet because they must be objectively quantifiable.
Contingent liability - ANSWER Liability that cannot be objectively
quantifiable
Stockholder's Equity - ANSWER Capital + Retained Earnings
Capital - ANSWER Investment by the stockholders
Retained Earnings - ANSWER Earnings retained in the business
Ending RE = - ANSWER beginning RE + NIAT - Dividends
, Dividend - ANSWER distribution of retained earnings to stockholders
Expense - ANSWER expired asset
Revenue - ANSWER Rendered goods and services with the expectation of
payment
Chart of Accounts - ANSWER Index: list of names and account numbers for
ALL accounts
General Journal - ANSWER "Book of Original Entry": shows the debits and
credits for EACH accounting transaction
General Ledger - ANSWER list of all transactions for the accounting period
SORTED by account number
Debit - ANSWER entry on the left side of a general ledger account
Credit - ANSWER entry on the right side of a general ledger account
Trial balance - ANSWER list of all accounts showing that the total debits =
total credits
Adjusting entry - ANSWER reconciles a general ledger account to a backup
schedule
Closing entries - ANSWER at the end of period, all revenue and expense
accounts closed to RE
Reversing entries - ANSWER Reversing an accrual entry from a previous
period
Contra account - ANSWER account used to keep the balance in another
account visible
SOLUTION
Accounting - ANSWER The process of keeping the financial score for the
entity
Revenue Recognition Principle - ANSWER EARNED: rendered goods and
services RECOGNIZED: expectation of payment
Matching Principle - ANSWER Matches expenses with revenue in the period
they occur
Materiality Principle - ANSWER If you knew the fact, it could change your
mind; 5% of something
Assets - ANSWER Something of future economic value. Not all are shown on
the balance sheet because they must be objectively quantifiable to be
recorded on the balance sheet
Liability - ANSWER Something owed. Not all liabilities are on the balance
sheet because they must be objectively quantifiable.
Contingent liability - ANSWER Liability that cannot be objectively
quantifiable
Stockholder's Equity - ANSWER Capital + Retained Earnings
Capital - ANSWER Investment by the stockholders
Retained Earnings - ANSWER Earnings retained in the business
Ending RE = - ANSWER beginning RE + NIAT - Dividends
, Dividend - ANSWER distribution of retained earnings to stockholders
Expense - ANSWER expired asset
Revenue - ANSWER Rendered goods and services with the expectation of
payment
Chart of Accounts - ANSWER Index: list of names and account numbers for
ALL accounts
General Journal - ANSWER "Book of Original Entry": shows the debits and
credits for EACH accounting transaction
General Ledger - ANSWER list of all transactions for the accounting period
SORTED by account number
Debit - ANSWER entry on the left side of a general ledger account
Credit - ANSWER entry on the right side of a general ledger account
Trial balance - ANSWER list of all accounts showing that the total debits =
total credits
Adjusting entry - ANSWER reconciles a general ledger account to a backup
schedule
Closing entries - ANSWER at the end of period, all revenue and expense
accounts closed to RE
Reversing entries - ANSWER Reversing an accrual entry from a previous
period
Contra account - ANSWER account used to keep the balance in another
account visible
