Chapter 1

Question 1

The information system that measures business activities, processes the information into reports, and communicates the results to decision makers

Answer 1

Accounting

Question 2

The field of accounting that provides information for external decision makers

Answer 2

Financial Accounting

Question 3

The field of accounting that provides information for internal decision makers

Answer 3

Managerial Accounting

Question 4

Any person or business to whom a business owes money

Answer 4

Creditor

Question 5

Licensed professional accountants who serve the general public

Answer 5

Certifies Public Accountants (CPA)

Question 6

Certified professionals that specialize in accounting and financial management knowledge

Answer 6

Certified Management Accountants (CMA)

Question 7

Private organization that oversees the creation and governance of accounting standards in the United States

Answer 7

Financial Accounting Standards Board (FASB)

Question 8

U.S. governmental agency that oversees the U.S. financial markets

Answer 8

Securities and Exchange Commission (SEC)

Question 9

Accounting guidelines as per FASB; the main U.S. accounting rulebook

Answer 9

Generally Accepted Accounting Principles (GAAP)

Question 10

An organization that stands apart as a separate economic unit

Answer 10

Economic Entity Assumption

Question 11

A person who owns stock in a corporation

Answer 11

Stockholder

Question 12

A business with a single owner

Answer 12

Sole Proprietorship

Question 13

A business with two or more owners and not organized as a corporation

Answer 13

Partnership

Question 14

A business organized under state law that is a separate legal enitity

Answer 14

Corporation

Question 15

A company in which each member is only for their own actions

Answer 15

Limited-Liability Company (LLC)

Question 16

Acquired assets and services should be recorded at their actual cost

Answer 16

Cost Principle

Question 17

Assumes that the entity will remain in operation for the foreseeable future

Answer 17

Going Concern Assumption

Question 18

Assumption that requires the items on financial statements be measured in terms of a monetary unit

Answer 18

Monetary Unit Assumption

Question 19

Global accounting guidelines, provided by the IASB

Answer 19

International Financial Reporting Standards (IFRS)

Question 20

Private organization that oversees the creation and governance of IFRS

Answer 20

International Accounting Standards Board (IASB)

Question 21

AN examination of a company’s financial statements and records

Answer 21

Audit

Question 22

Requires companies to review internal control and take responsibility for the accuracy and completeness of their financial reports

Answer 22

Sarbanes-Oxley Act (SOX)

Question 23

Assets = Liabilities + Equity

Answer 23

Accounting Equation

Question 24

Economic resources that are expected to benefit the business in the future, something the business owns or has control of

Answer 24

Assets

Question 25

Debts that are owed to creditors

Answer 25

Liabilities

Question 26

The owners’ claim to the assets of the business

Answer 26

Equity

Question 27

Owner contribution to a corporation

Answer 27

Contribute Capital

Question 28

Amounts earned from delivering goods or services to customers

Answer 28

Revenues

Question 29

Cost of selling goods or

Answer 29

Expenses

Question 30

Distribution of a corporation’s earnings to stockholders

Answer 30

Dividend

Question 31

Represents the basic ownership of a compnay

Answer 31

Common Stock

Question 32

Capital earned by profitable operations of a corporation that is not distributed to stockholders

Answer 32

Retained Earnings

Question 33

Result when total revenue is greater than total expenses

Answer 33

Net Income

Question 34

Result when total revenue is less than total expenses

Answer 34

Net Loss

Question 35

An event that affects the financial position of the business and can be measured in dollar amounts

Answer 35

Transaction

Question 36

A short term liability that will be paid in the future

Answer 36

Accounts Payable

Question 37

The right to receive cash in the future from customers for goods sold or services performed

Answer 37

Accounts Receivable

Question 38

Business documents that are used to communicate information needed to make business decisions

Answer 38

Financial Statements

Question 39

Reports the net income/loss of a business for a specific period

Answer 39

Income Statement

Question 40

Reports the company’s retained earnings balance change from the beginning to the end of a period

Answer 40

Statement of Retained Earnings

Question 41

Reports on the assets, liabilities, and equity of the business as of a specific date

Answer 41

Balance Sheet

Question 42

Reports on a business’ cash receipts and cash payments for a specific period

Answer 42

Statement of Cash Flows