Accounting 101- Basic Accounting Questions
With All Correct & Verified Answers
Accountant Correct answer-A person who keeps the financial history of the transactions of an
economic unit in written form. (p. 4)
Accounting Correct answer-The process of analyzing, classifying, recording, summarizing, and
interpreting business transactions in financial or monetary terms. (p. 3)
Economic unit Correct answer-Includes both business enterprises and not-for-profit entities. (p. 3)
Ethics Correct answer-A philosophy or code or system of morality that is, how we conduct
ourselves from day to day in a variety of situations requiring a decision, usually of a right or wrong
nature. (p. 8)
(FASB) Financial Accounting Standards Board SEC-FASB-GAAP Correct answer-The organization,
created in 1973 by the SEC, that created GAAP. (p. 4)
(GAAP) Generally Accepted Accounting Principles Correct answer-The rules or guidelines used for
carrying out the accounting process. (p. 4)
(IASB) International Accounting Standards Board Correct answer-The International organization
that provides Standards or rules for international financial reporting. (p. 4)
(IFRS) International Financial Reporting Standards Correct answer-The rules or guidelines that
guide International Financial Reporting. (p.g 4)
Paraprofessional accountants Correct answer-People who are qualified in accounting to assume
the duties of a general bookkeeper as well as some of the duties of a professional accountant under
that accountant's supervision. (p. 7)
Sarbanes-Oxley Act Correct answer-A U.S. federal law enacted as a response to a number of major
corporate and accounting scandals that establishes a wide range of rules related to the audit
environment and internal controls. (p. 9)
(SEC) Securities and Exchange Commission Correct answer-The agency responsible for regulating
public companies traded on a U.S. Stock Exchange. (p. 4)
Transaction Correct answer-An event directly affecting an economic entity that can be expressed in
terms of money and that must be recorded in the accounting records. (p. 3)
Owner's Equity Correct answer-Owner's right to or investment in the business. (p. 13)
Assets Correct answer-Cash, properties or things of value owned by an economic unit or business
entity. (p. 13)
Business entity Correct answer-A business enterprise, separate and distinct from the persons who
supply the assets it uses. (p. 13)
Creditor Correct answer-One to whom money is owed. (p. 14)
, Capital Correct answer-The owner's investment, or equity, in an enterprise.
(p. 13)
Chart of Accounts Correct answer-The official list of accounts tailor-made for the business. (p. 22)
Liabilities Correct answer-Debts or amounts owed to creditors. (p. 14)
Revenues Correct answer-Amounts earned by a business (fees for services, income from sales, rent
income, interest earned for lending money).
Expenses Correct answer-The costs that relate to earning revenue (the costs of doing business);
examples are wages, rent, interest, and advertising. They may be paid in cash immediately or at a
future time (AP) (p.21)
Account numbers Correct answer-The numbers assigned to accounts according to the chart of
accounts. (p. 22)
Accounts Correct answer-The categories under the Assets, Liabilities, and Owner's Equity headings.
(p.16)
Accounts Payable Correct answer-A liability account used for short-term obligations or charge
accounts, usually due within 30 days (p. 18)
Accounts Receivable Correct answer-An account used to record the amounts due from (legal
claims against) charge customers. (p.27)
Backups Correct answer-Procedures that store company data files in a a safe place, such as online
or on a flash drive. (p. 34)
Cloud computing Correct answer-Software that is used via the Internet instead of from a local
computer. Software and data can be accessed anywhere there is an Internet connection. (p. 34)
Computerized accounting Correct answer-An accounting system that records transactions using a
computer and accounting software such as QuickBooks. (p. 33)
Double-entry accounting Correct answer-The system by which each business transaction is
recorded in at least two accounts and the accounting equation is kept in balance. (p.17)
Equity Correct answer-The value of a right or claim to or financial interest in an asset or group of
assets. (p. 13)
Fair market value Correct answer-The present worth of an asset or the amount that would be
received if the asset were sold to an outsider on the open market. (p. 19)
Fundamental accounting equation Correct answer-(Assets=Liabilities+Owner's Equity) An equation
expressing the relationship of assets, liabilities, and owner's equity. (p. 14)
Manual accounting system Correct answer-An accounting system in which transactions are
recorded by hand. (p. 33)
With All Correct & Verified Answers
Accountant Correct answer-A person who keeps the financial history of the transactions of an
economic unit in written form. (p. 4)
Accounting Correct answer-The process of analyzing, classifying, recording, summarizing, and
interpreting business transactions in financial or monetary terms. (p. 3)
Economic unit Correct answer-Includes both business enterprises and not-for-profit entities. (p. 3)
Ethics Correct answer-A philosophy or code or system of morality that is, how we conduct
ourselves from day to day in a variety of situations requiring a decision, usually of a right or wrong
nature. (p. 8)
(FASB) Financial Accounting Standards Board SEC-FASB-GAAP Correct answer-The organization,
created in 1973 by the SEC, that created GAAP. (p. 4)
(GAAP) Generally Accepted Accounting Principles Correct answer-The rules or guidelines used for
carrying out the accounting process. (p. 4)
(IASB) International Accounting Standards Board Correct answer-The International organization
that provides Standards or rules for international financial reporting. (p. 4)
(IFRS) International Financial Reporting Standards Correct answer-The rules or guidelines that
guide International Financial Reporting. (p.g 4)
Paraprofessional accountants Correct answer-People who are qualified in accounting to assume
the duties of a general bookkeeper as well as some of the duties of a professional accountant under
that accountant's supervision. (p. 7)
Sarbanes-Oxley Act Correct answer-A U.S. federal law enacted as a response to a number of major
corporate and accounting scandals that establishes a wide range of rules related to the audit
environment and internal controls. (p. 9)
(SEC) Securities and Exchange Commission Correct answer-The agency responsible for regulating
public companies traded on a U.S. Stock Exchange. (p. 4)
Transaction Correct answer-An event directly affecting an economic entity that can be expressed in
terms of money and that must be recorded in the accounting records. (p. 3)
Owner's Equity Correct answer-Owner's right to or investment in the business. (p. 13)
Assets Correct answer-Cash, properties or things of value owned by an economic unit or business
entity. (p. 13)
Business entity Correct answer-A business enterprise, separate and distinct from the persons who
supply the assets it uses. (p. 13)
Creditor Correct answer-One to whom money is owed. (p. 14)
, Capital Correct answer-The owner's investment, or equity, in an enterprise.
(p. 13)
Chart of Accounts Correct answer-The official list of accounts tailor-made for the business. (p. 22)
Liabilities Correct answer-Debts or amounts owed to creditors. (p. 14)
Revenues Correct answer-Amounts earned by a business (fees for services, income from sales, rent
income, interest earned for lending money).
Expenses Correct answer-The costs that relate to earning revenue (the costs of doing business);
examples are wages, rent, interest, and advertising. They may be paid in cash immediately or at a
future time (AP) (p.21)
Account numbers Correct answer-The numbers assigned to accounts according to the chart of
accounts. (p. 22)
Accounts Correct answer-The categories under the Assets, Liabilities, and Owner's Equity headings.
(p.16)
Accounts Payable Correct answer-A liability account used for short-term obligations or charge
accounts, usually due within 30 days (p. 18)
Accounts Receivable Correct answer-An account used to record the amounts due from (legal
claims against) charge customers. (p.27)
Backups Correct answer-Procedures that store company data files in a a safe place, such as online
or on a flash drive. (p. 34)
Cloud computing Correct answer-Software that is used via the Internet instead of from a local
computer. Software and data can be accessed anywhere there is an Internet connection. (p. 34)
Computerized accounting Correct answer-An accounting system that records transactions using a
computer and accounting software such as QuickBooks. (p. 33)
Double-entry accounting Correct answer-The system by which each business transaction is
recorded in at least two accounts and the accounting equation is kept in balance. (p.17)
Equity Correct answer-The value of a right or claim to or financial interest in an asset or group of
assets. (p. 13)
Fair market value Correct answer-The present worth of an asset or the amount that would be
received if the asset were sold to an outsider on the open market. (p. 19)
Fundamental accounting equation Correct answer-(Assets=Liabilities+Owner's Equity) An equation
expressing the relationship of assets, liabilities, and owner's equity. (p. 14)
Manual accounting system Correct answer-An accounting system in which transactions are
recorded by hand. (p. 33)
