Accounting Chapter 1-3 ACTUAL UPDATED QUESTIONS
AND CORRECT ANSWERS
, Accounting Steps 1. Identify
2. Record
3. Communicate
Record Substeps 1. T-accounts/Record to a journal
2. Post to a Ledger
3. Prepare a trial balance
Generally Accepted Accounting Principles Financial accounting is governed by concepts and rules
(GAAP) 1. Relevant Info
2. Reliable Info
3.Comparable Info
Measurement principle Accounting Information is based on actual cost
(Cost principle)
Revenue Recognition principle Provides guidance on when a company just recognize revenue
Matching Principle Prescribes that a company must record its expenses incurred to generate the
(Expense Recognition) revenue
Full disclosure principle Requires a company to report the details behind financial statements that would
impact users' decisions.
Going-Concern Assumption Accounting Info reflects a presumption the business will continue operating
Monetary unit assumption We can express transactions in money
Time Period Assumptions The life of a company can be divided into time periods, such as months and years
Business entity assumption A business is accounted for separately from its owner or other business entities
Business Entity Forms 1. Sole proprietorship
2. Partnership
3. Corporation
Sarbanes-Oxley Act In response to public scandals:
The act requires that public companies apply both accounting oversight and
stringent internal controls
Accounting Equation Assets=Liabilities+Equity
Types of Assets 1. Cash
2. Accounts Receivable
3. Vehicles
4. Store Supplies
5. Equipment
6. Land
7. Buildings
8. Notes Receivable
AND CORRECT ANSWERS
, Accounting Steps 1. Identify
2. Record
3. Communicate
Record Substeps 1. T-accounts/Record to a journal
2. Post to a Ledger
3. Prepare a trial balance
Generally Accepted Accounting Principles Financial accounting is governed by concepts and rules
(GAAP) 1. Relevant Info
2. Reliable Info
3.Comparable Info
Measurement principle Accounting Information is based on actual cost
(Cost principle)
Revenue Recognition principle Provides guidance on when a company just recognize revenue
Matching Principle Prescribes that a company must record its expenses incurred to generate the
(Expense Recognition) revenue
Full disclosure principle Requires a company to report the details behind financial statements that would
impact users' decisions.
Going-Concern Assumption Accounting Info reflects a presumption the business will continue operating
Monetary unit assumption We can express transactions in money
Time Period Assumptions The life of a company can be divided into time periods, such as months and years
Business entity assumption A business is accounted for separately from its owner or other business entities
Business Entity Forms 1. Sole proprietorship
2. Partnership
3. Corporation
Sarbanes-Oxley Act In response to public scandals:
The act requires that public companies apply both accounting oversight and
stringent internal controls
Accounting Equation Assets=Liabilities+Equity
Types of Assets 1. Cash
2. Accounts Receivable
3. Vehicles
4. Store Supplies
5. Equipment
6. Land
7. Buildings
8. Notes Receivable
