Accounting 201 Exam 1 with answers 2023 graded A+

organization to interested users. uses 4 financial statements Accounting Assumptions - 1. monetary units- expressed in terms of money 2. economic entity- every entity can be separately identified and corporations and separate entities than the owners 3. periodicity-artificial time periods concern-continue operating into foreseeable future al basis- record transactions in periods they occur Accounting Info System - the system of collecting and processing transactional data and communicating financial info to decision makers Accounting Information - the primary goal of accounting is to provide useful information Accounting Principles - -records assets at cost, not their true market value value principle-records assets and liabs at fair value disclosure- disclose all info that may affect a financial statement user's decision Accounts - an individual accounting record of increases and decreases in a specific asset, liab, or SE item e.g. cash, supplies, A/P,RE accounts increase/decrease by debiting/crediting them if debits>credits---said to have a "debit balance" Annual Report - public companies are required by law to provided audited financial statements and other material once/yr Includes: 4 financial stmts, Management discussion and analysis-liquidity(ability to pay debt in 1 yr), capital resources(ability to find operations and expansion), results of operations; Notes to F/S(clarify and expand on info presented, describe accounting policies, describe uncertainties; Auditors report=certified public accountant CPA, to see if fair and follows GAAP and if yes -- Unqualified opinion Balance Sheet - reports asses and claims to assets at one point in time assets- resources owned by the company =cash, a/r, inventory, investments, furniture, equipment, and supplies liabilities- obligations or debts of the company =a/p(verbal promise to pay), n/p(written promise to pay), interest payable(we owe interest from borrowing $), salaries payable, unearned revenue stockholder's equity- owner's claims on assets =common stock or PIC($ contributed by owners when they buy stock), RE Basic Accounting Equation - Assets = Liabilities + Stockholder's Equity Basic Steps in Recording Process - 1. analyze transaction-what happened? what accounts were affected? did they increase or decrease? 2. journalize transactions-make the journal entry in the "General Journal"(accounti