WGU VYC1 PRINCIPLES OF ACCOUNTING.
Designed to boost confidence and grades!
Accounts Payable - Answer: Amounts a business must pay in the future.
Accounts Receivable - Answer: Claims for future collection from customers.
Assets - Answer: Property owned by a business.
Balance Sheet - Answer: A formal report of a business' financial condition on a certain
date; reports the assets, liabilities, and owner's equity of the business.
Break Even - Answer: A point at which revenue equals expenses.
Business Transactions - Answer: A financial event that changes the resources of a firm.
Capital - Answer: Financial investment in a business; equity.
Equity - Answer: An owner's financial interest in a business.
Expense - Answer: An outflow of cash, use of other assets, or incurring of a liability.
Fair Market Value - Answer: The current worth of an asset or the price the asset would
bring if sold on the open market.
Fundamental Accounting Equation - Answer: The relationship between assets and
liabilities plus the owner's equity.
Income Statement - Answer: A formal report of business operations covering a specific
period of time; also called a profit and loss statement or a statement of income and
expenses.
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APPHIA - Crafted with Care and Precision for Academic Excellence.
,Liabilities - Answer: Debts or obligations of a business.
Net Income - Answer: The result of an excess of revenue over expenses.
Net Loss - Answer: The result of an excess of expenses over revenue.
On Account - Answer: An arrangement to allow payment at a later date; also called a
charge account or open-account credit.
Owner's Equity - Answer: The financial interest of the owner of a business; also called
proprietorship or net worth.
Revenue - Answer: An inflow of money or other assets that results from the sales of
goods or services or from the use of money or property; also called income.
Statement of Owner's Equity - Answer: A formal report of changes that occurred in the
owner's financial interest during a reporting period.
Withdrawals - Answer: Funds taken from the business by the owner for personal use.
Accounting - Answer: The process by which financial information about a business is
recorded, classified, summarized, interpreted, and communicated to owners, managers,
and other interested parties.
Accounting System - Answer: A process designed to accumulate, classify, and
summarize financial data.
Auditing - Answer: The review of financial statements to assess their fairness and
adherence to generally accepted accounting principles.
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APPHIA - Crafted with Care and Precision for Academic Excellence.
, Auditor's Report - Answer: An independent accountant's review of a firm's financial
statements.
Certified Public Accountant (CPA) - Answer: An independent accountant who provides
accounting services to the public for a fee.
Corporation - Answer: A publicly or privately owned business entity that is separate
from its owners and has a legal right to own property and do business in its own name;
stockholders are not responsible for the debts or taxes of the business.
Creditor - Answer: One to whom money is owned.
Discussion Memorandum - Answer: An explanation of a topic under consideration by
the Financial Accounting Standards Board.
Economic Entity - Answer: A business or organization whose major purpose is to
produce a profit for its owners.
Entity - Answer: Anything having its own separate identity, such as an individual, a
town, a university, or a business.
Exposure Draft - Answer: A proposed solution to a problem being considered by the
Financial Accounting Standards Board.
Financial Statements - Answer: Periodic Reports of a firm's financial position or
operating results.
Generally Accepted Accounting Principles (GAAP) - Answer: Accounting standards
developed and applied by professional accountants.
3
APPHIA - Crafted with Care and Precision for Academic Excellence.
Designed to boost confidence and grades!
Accounts Payable - Answer: Amounts a business must pay in the future.
Accounts Receivable - Answer: Claims for future collection from customers.
Assets - Answer: Property owned by a business.
Balance Sheet - Answer: A formal report of a business' financial condition on a certain
date; reports the assets, liabilities, and owner's equity of the business.
Break Even - Answer: A point at which revenue equals expenses.
Business Transactions - Answer: A financial event that changes the resources of a firm.
Capital - Answer: Financial investment in a business; equity.
Equity - Answer: An owner's financial interest in a business.
Expense - Answer: An outflow of cash, use of other assets, or incurring of a liability.
Fair Market Value - Answer: The current worth of an asset or the price the asset would
bring if sold on the open market.
Fundamental Accounting Equation - Answer: The relationship between assets and
liabilities plus the owner's equity.
Income Statement - Answer: A formal report of business operations covering a specific
period of time; also called a profit and loss statement or a statement of income and
expenses.
1
APPHIA - Crafted with Care and Precision for Academic Excellence.
,Liabilities - Answer: Debts or obligations of a business.
Net Income - Answer: The result of an excess of revenue over expenses.
Net Loss - Answer: The result of an excess of expenses over revenue.
On Account - Answer: An arrangement to allow payment at a later date; also called a
charge account or open-account credit.
Owner's Equity - Answer: The financial interest of the owner of a business; also called
proprietorship or net worth.
Revenue - Answer: An inflow of money or other assets that results from the sales of
goods or services or from the use of money or property; also called income.
Statement of Owner's Equity - Answer: A formal report of changes that occurred in the
owner's financial interest during a reporting period.
Withdrawals - Answer: Funds taken from the business by the owner for personal use.
Accounting - Answer: The process by which financial information about a business is
recorded, classified, summarized, interpreted, and communicated to owners, managers,
and other interested parties.
Accounting System - Answer: A process designed to accumulate, classify, and
summarize financial data.
Auditing - Answer: The review of financial statements to assess their fairness and
adherence to generally accepted accounting principles.
2
APPHIA - Crafted with Care and Precision for Academic Excellence.
, Auditor's Report - Answer: An independent accountant's review of a firm's financial
statements.
Certified Public Accountant (CPA) - Answer: An independent accountant who provides
accounting services to the public for a fee.
Corporation - Answer: A publicly or privately owned business entity that is separate
from its owners and has a legal right to own property and do business in its own name;
stockholders are not responsible for the debts or taxes of the business.
Creditor - Answer: One to whom money is owned.
Discussion Memorandum - Answer: An explanation of a topic under consideration by
the Financial Accounting Standards Board.
Economic Entity - Answer: A business or organization whose major purpose is to
produce a profit for its owners.
Entity - Answer: Anything having its own separate identity, such as an individual, a
town, a university, or a business.
Exposure Draft - Answer: A proposed solution to a problem being considered by the
Financial Accounting Standards Board.
Financial Statements - Answer: Periodic Reports of a firm's financial position or
operating results.
Generally Accepted Accounting Principles (GAAP) - Answer: Accounting standards
developed and applied by professional accountants.
3
APPHIA - Crafted with Care and Precision for Academic Excellence.
