ACC 356 EXAM 1 VERIFIED ACCURATE STUDY GUIDE
Assets - Answers -Resources of the company; present rights to an economic benefit
(cash, receivables, land, equipment)
Liabilities - Answers -Obligations of the company; present obligation to transfer an
economic benefit (accounts payable, taxes payable)
Shareholders' Equity - Answers -Owners' residual interest (assets minus liabilities);
also called stockholders' equity, owners' equity, or book value of equity
Revenue - Answers -Sales of goods and services from primary operations; inflows of
assets or settlements of liabilities
Expenses - Answers -Cost of producing revenue; resources consumed in earning profit
or loss during a period
Dividends - Answers -Payments to owners
Form 10-K - Answers -US annual filing required for publicly traded companies with the
SEC
Form 10-Q - Answers -US interim (quarterly) filing required for publicly traded
companies with the SEC
SEC (Securities and Exchange Commission) - Answers -Has authority to set and
enforce accounting standards for publicly traded companies under civil law
FASB (Financial Accounting Standards Board) - Answers -Private sector organization
that sets accounting standards; delegated by SEC
US GAAP - Answers -Generally Accepted Accounting Principles; US accounting
standards and rules
IFRS - Answers -International Financial Reporting Standards; set by the International
Accounting Standards Board
Recognition - Answers -Process of admitting information into financial statements when
it meets criteria: meets definition of element, has measurement attribute, is relevant, is
reliable
Measurement - Answers -Process of associating numerical amounts with financial
statement elements
, Disclosure - Answers -Process of including additional pertinent information in financial
statements and accompanying notes
Cash-basis accounting - Answers -Produces net operating cash flow: cash receipts
minus cash payments
Accrual accounting - Answers -Captures period performance related to activities that
impact multiple periods
Conceptual Framework - Answers -The "Accounting Constitution"; provides underlying
foundation for US accounting standards via SFACs
Relevance - Answers -Qualitative characteristic; information capable of making a
difference in decisions
Faithful Representation - Answers -Qualitative characteristic; agreement between
measure/description and phenomenon it represents
Economic Entity Assumption - Answers -Presumes economic events can be identified
specifically with an economic entity
Going Concern Assumption - Answers -Anticipates that a business entity will continue
to operate indefinitely
Periodicity Assumption - Answers -Allows the life of a company to be divided into
artificial time periods to provide timely information
Monetary Unit Assumption - Answers -Financial statements measured in US dollars
Accounting Equation - Answers -A = L + SE; summarizes effects of transactions on
financial position
Debit - Answers -Left side of an account; increases assets, dividends, and expenses;
decreases liabilities, equity, and revenues
Credit - Answers -Right side of an account; increases liabilities, equity, and revenues;
decreases assets, dividends, and expenses
DEA LOR - Answers -Mnemonic: Debit = Dividends, Expenses, Assets; Left side;
Credit = Liabilities, Owners' equity (stockholders' equity), Revenues; Right side
T-Account - Answers -Visual representation of an account showing debits on left,
credits on right
Journal Entry - Answers -Chronological record of transactions with debits and credits
Assets - Answers -Resources of the company; present rights to an economic benefit
(cash, receivables, land, equipment)
Liabilities - Answers -Obligations of the company; present obligation to transfer an
economic benefit (accounts payable, taxes payable)
Shareholders' Equity - Answers -Owners' residual interest (assets minus liabilities);
also called stockholders' equity, owners' equity, or book value of equity
Revenue - Answers -Sales of goods and services from primary operations; inflows of
assets or settlements of liabilities
Expenses - Answers -Cost of producing revenue; resources consumed in earning profit
or loss during a period
Dividends - Answers -Payments to owners
Form 10-K - Answers -US annual filing required for publicly traded companies with the
SEC
Form 10-Q - Answers -US interim (quarterly) filing required for publicly traded
companies with the SEC
SEC (Securities and Exchange Commission) - Answers -Has authority to set and
enforce accounting standards for publicly traded companies under civil law
FASB (Financial Accounting Standards Board) - Answers -Private sector organization
that sets accounting standards; delegated by SEC
US GAAP - Answers -Generally Accepted Accounting Principles; US accounting
standards and rules
IFRS - Answers -International Financial Reporting Standards; set by the International
Accounting Standards Board
Recognition - Answers -Process of admitting information into financial statements when
it meets criteria: meets definition of element, has measurement attribute, is relevant, is
reliable
Measurement - Answers -Process of associating numerical amounts with financial
statement elements
, Disclosure - Answers -Process of including additional pertinent information in financial
statements and accompanying notes
Cash-basis accounting - Answers -Produces net operating cash flow: cash receipts
minus cash payments
Accrual accounting - Answers -Captures period performance related to activities that
impact multiple periods
Conceptual Framework - Answers -The "Accounting Constitution"; provides underlying
foundation for US accounting standards via SFACs
Relevance - Answers -Qualitative characteristic; information capable of making a
difference in decisions
Faithful Representation - Answers -Qualitative characteristic; agreement between
measure/description and phenomenon it represents
Economic Entity Assumption - Answers -Presumes economic events can be identified
specifically with an economic entity
Going Concern Assumption - Answers -Anticipates that a business entity will continue
to operate indefinitely
Periodicity Assumption - Answers -Allows the life of a company to be divided into
artificial time periods to provide timely information
Monetary Unit Assumption - Answers -Financial statements measured in US dollars
Accounting Equation - Answers -A = L + SE; summarizes effects of transactions on
financial position
Debit - Answers -Left side of an account; increases assets, dividends, and expenses;
decreases liabilities, equity, and revenues
Credit - Answers -Right side of an account; increases liabilities, equity, and revenues;
decreases assets, dividends, and expenses
DEA LOR - Answers -Mnemonic: Debit = Dividends, Expenses, Assets; Left side;
Credit = Liabilities, Owners' equity (stockholders' equity), Revenues; Right side
T-Account - Answers -Visual representation of an account showing debits on left,
credits on right
Journal Entry - Answers -Chronological record of transactions with debits and credits
