Accounting 201 Exam 1 100% verified question
and answers
Accounting - ANSWER>info system that identifies, records, and communicates the economic
events of an organization to interested users.
uses 4 financial statements
Accounting Assumptions - ANSWER>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
4.going concern-continue operating into foreseeable future
5.accrual basis- record transactions in periods they occur
Accounting Info System - ANSWER>the system of collecting and processing transactional data and
communicating financial info to decision makers
Accounting Information - ANSWER>the primary goal of accounting is to provide useful
information
Accounting Principles - ANSWER>1.cost-records assets at cost, not their true market value
2.fair value principle-records assets and liabs at fair value
3.full disclosure- disclose all info that may affect a financial statement user's decision
Accounts - ANSWER>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 - ANSWER>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 - ANSWER>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 - ANSWER>Assets = Liabilities + Stockholder's Equity
Basic Steps in Recording Process - ANSWER>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"(accounting record
where journal entries are listed in chronological order)
3. post transaction- transfer (post) the journal info to the "General Ledger"(a 'book' that has a
separate page for all our assets, liabs,and SE accounts)
Characteristics of Useful Information - ANSWER>1. Relevance- info makes a diff in decisions
-predictive value=helps provide accurate expectations
and answers
Accounting - ANSWER>info system that identifies, records, and communicates the economic
events of an organization to interested users.
uses 4 financial statements
Accounting Assumptions - ANSWER>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
4.going concern-continue operating into foreseeable future
5.accrual basis- record transactions in periods they occur
Accounting Info System - ANSWER>the system of collecting and processing transactional data and
communicating financial info to decision makers
Accounting Information - ANSWER>the primary goal of accounting is to provide useful
information
Accounting Principles - ANSWER>1.cost-records assets at cost, not their true market value
2.fair value principle-records assets and liabs at fair value
3.full disclosure- disclose all info that may affect a financial statement user's decision
Accounts - ANSWER>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 - ANSWER>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 - ANSWER>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 - ANSWER>Assets = Liabilities + Stockholder's Equity
Basic Steps in Recording Process - ANSWER>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"(accounting record
where journal entries are listed in chronological order)
3. post transaction- transfer (post) the journal info to the "General Ledger"(a 'book' that has a
separate page for all our assets, liabs,and SE accounts)
Characteristics of Useful Information - ANSWER>1. Relevance- info makes a diff in decisions
-predictive value=helps provide accurate expectations
