ACCOUNTING 211 Liberty University -Accounting 211 Test 1 (chapters 1-4) correctly answered

Financial accounting - correct answer providing information about the financial resources, obligations and activities of an economic entity that is intended for use primarily by external decision makers, investors and creditors Generally Accepted accounting principles (GAAP) - correct answer principles that provide the framework for determining what information is to be included in financial statements and how that information is to be presented. Important because it keeps business honest and on the same playing field. General-purpose assumption/information - correct answer information that is intended to meet the needs of multiple users that have an interest in the financial activities of an enterprise rather than tailored to the specific information needs of one user. Return of investment vs. return on investment - correct answer Return OF investment= the repayment of an investor of the amount originally invested in another enterprise Return ON investment= the payment of an amount (interest, dividends) for using another's money Assets - correct answer economic resources owned by an entity Liabilities - correct answer debts or obligations of an entity that resulted from past transactions Owner's Equity - correct answer the excess of assets over liabilities. the amount of the owners investment in the business, plus profits from successful operations that have been retained from the business Revenues - correct answer increases in the enterprise's assets as a result of profit-oriented activities Expenses - correct answer past, present or future reductions in cash required to generate revenues