Accounting 200 Exam 1 Questions With All
Correct & Verified Answers
account payable Correct answer-a liability backed by the general reputation and credit standing at
the debtor.
accounting Correct answer-the information system that measures business activities, processes
that information into reports and financial statements, and communicates the results to decision
makers.
accounting equation Correct answer-assets=liabilities+owners equity
asset Correct answer-an economic resource that is expected to be of benefit in the future.
balance sheet Correct answer-list of an entity's assets, liabilities, and owner's equity as of a specific
date. also called the statement of financial position.
board of directors Correct answer-group elected by the stockholders to set policy for a corporation
and to appoint its officers.
capital Correct answer-another name for the owner's equity of a business
cash Correct answer-money and any medium of exchange that a bank accepts at face value.
common stock Correct answer-the most basic form of capital stock.
continuity (going concern) assumption Correct answer-holds that the entity will remain in
operation for the foreseeable future.
corporation Correct answer-a business owned by stockholders. It is a legal entity, an "artificial
person" in the eyes of the law.
current asset Correct answer-an asset that is expected to be converted to cash, sold, or consumed
during the next 12 months or within the business's normal operating cycle if longer than a year.
current liability Correct answer-a debt due to be paid within one year or within the entity's
operating cycle if the cycle is longer than a year.
deficit Correct answer-negative balance in retained earnings caused by net losses over a period of
years.
dividends Correct answer-distributions (usually cash) by a corporation to its stockholders.
entity Correct answer-an organization or a section of an organization that, for accounting
purposes, stands apart from other organizations and individuals as a separate economic unit.
expenses Correct answer-decrease in retained earnings that results from operations; the cost of
doing business;opposite of revenues.
, fair value Correct answer-the amount that a business could sell an asses for, or the amount that a
business could pay to settle a liability.
financial accounting Correct answer-the branch of accounting that provides information to people
outside the firm.
financial statements Correct answer-business documents that report financial information about a
business entity to decision makers.
financial activities Correct answer-activities that obtain from investors and creditors the cash
needed to launch and sustain the business; a section of the statement of cash flows.
fixed assets and plant assets Correct answer-other names for property, plant, and equipment.
GAAP Correct answer-accounting guidelines, formulated by the Financial Standards Board, that
govern how accounting is practiced.
historical cost principle Correct answer-principle that states that assets and services should be
recorded at their actual cost.
income statement Correct answer-a financial statement listing an entity's revenues, expenses, and
net income or net loss for a specific period. Also called the statement of operations.
IFRS Correct answer-accounting guidelines, formulated by the international accounting standards
board.
investing activities Correct answer-activities that increase or decrease the long-term assets
available to the business; a section of the statement of cash flows.
liability Correct answer-an economic obligation (debt) payable to an individual or an organization
outside the business.
limited liability company Correct answer-a business organization in which the business (not the
owner) is liable for the company's debts.
long term debt Correct answer-a liability that falls due beyond one year form the date of the
financial statements.
management accounting Correct answer-the branch of accounting that generates information for
the internal decision makers of a business, such as top executives.
merchandise inventory Correct answer-the merchandise that a company sells to customers, also
called inventory.
net earnings and net profit Correct answer-other names for net income.
net income Correct answer-excess of total revenues over total expenses. Also called net earnings
or net profit.
net loss Correct answer-excess of total expenses over total revenues.
Correct & Verified Answers
account payable Correct answer-a liability backed by the general reputation and credit standing at
the debtor.
accounting Correct answer-the information system that measures business activities, processes
that information into reports and financial statements, and communicates the results to decision
makers.
accounting equation Correct answer-assets=liabilities+owners equity
asset Correct answer-an economic resource that is expected to be of benefit in the future.
balance sheet Correct answer-list of an entity's assets, liabilities, and owner's equity as of a specific
date. also called the statement of financial position.
board of directors Correct answer-group elected by the stockholders to set policy for a corporation
and to appoint its officers.
capital Correct answer-another name for the owner's equity of a business
cash Correct answer-money and any medium of exchange that a bank accepts at face value.
common stock Correct answer-the most basic form of capital stock.
continuity (going concern) assumption Correct answer-holds that the entity will remain in
operation for the foreseeable future.
corporation Correct answer-a business owned by stockholders. It is a legal entity, an "artificial
person" in the eyes of the law.
current asset Correct answer-an asset that is expected to be converted to cash, sold, or consumed
during the next 12 months or within the business's normal operating cycle if longer than a year.
current liability Correct answer-a debt due to be paid within one year or within the entity's
operating cycle if the cycle is longer than a year.
deficit Correct answer-negative balance in retained earnings caused by net losses over a period of
years.
dividends Correct answer-distributions (usually cash) by a corporation to its stockholders.
entity Correct answer-an organization or a section of an organization that, for accounting
purposes, stands apart from other organizations and individuals as a separate economic unit.
expenses Correct answer-decrease in retained earnings that results from operations; the cost of
doing business;opposite of revenues.
, fair value Correct answer-the amount that a business could sell an asses for, or the amount that a
business could pay to settle a liability.
financial accounting Correct answer-the branch of accounting that provides information to people
outside the firm.
financial statements Correct answer-business documents that report financial information about a
business entity to decision makers.
financial activities Correct answer-activities that obtain from investors and creditors the cash
needed to launch and sustain the business; a section of the statement of cash flows.
fixed assets and plant assets Correct answer-other names for property, plant, and equipment.
GAAP Correct answer-accounting guidelines, formulated by the Financial Standards Board, that
govern how accounting is practiced.
historical cost principle Correct answer-principle that states that assets and services should be
recorded at their actual cost.
income statement Correct answer-a financial statement listing an entity's revenues, expenses, and
net income or net loss for a specific period. Also called the statement of operations.
IFRS Correct answer-accounting guidelines, formulated by the international accounting standards
board.
investing activities Correct answer-activities that increase or decrease the long-term assets
available to the business; a section of the statement of cash flows.
liability Correct answer-an economic obligation (debt) payable to an individual or an organization
outside the business.
limited liability company Correct answer-a business organization in which the business (not the
owner) is liable for the company's debts.
long term debt Correct answer-a liability that falls due beyond one year form the date of the
financial statements.
management accounting Correct answer-the branch of accounting that generates information for
the internal decision makers of a business, such as top executives.
merchandise inventory Correct answer-the merchandise that a company sells to customers, also
called inventory.
net earnings and net profit Correct answer-other names for net income.
net income Correct answer-excess of total revenues over total expenses. Also called net earnings
or net profit.
net loss Correct answer-excess of total expenses over total revenues.
