accounting language

Question 1

account payable

Answer 1

The liability created by a purchase on account

Question 2

account receivable

Answer 2

A claim against the customer created by selling merchandise or services on account.

Question 3

accounting

Answer 3

An information system that provides reports to users about the economic activities and condition of a business.

Question 4

accounting equation

Answer 4

Assets = Liabilities + Owner’s Equity

Question 5

asset

Answer 5

An economic resource controlled by an entity as a result of a past transaction and from which future economic benefit may be obtained

Question 6

balance sheet

statement of financial position

Answer 6

A list of the assets, liabilities, and owner’s equity as at a specific date.

Question 7

benefit versus cost constraint

or cost constraint.

Answer 7

The trade-off that exists between the accuracy of financial information and the cost to produce that information.

Question 8

business

Answer 8

An organization in which basic resources (inputs), such as materials and labour, are assembled and processed to provide goods or services (outputs) to customers

Question 9

business entity assumption

Answer 9

An assumption of accounting that limits the economic data in the accounting system to data related directly to the activities of the business.

Question 10

business transaction

Answer 10

An economic event or condition that directly changes an entity’s financial condition or directly affects its results of operations

Question 11

cash flow statement

Answer 11

A summary of the cash receipts and cash payments for a specific period of time

Question 12

comparability

Answer 12

A preferred charac¬teristic of accounting information whereby information for one company is comparable to information prepared for another organization

Question 13

corporation

Answer 13

A business organized under provincial, territorial, or federal charter as a separate legal entity

Question 14

cost principle

or historical cost basis

Answer 14

In financial statements, the recognition of transactions at the amount of cash paid or received

Question 15

ethics

Answer 15

Moral principles that guide the conduct of individuals

Question 16

expenses

Answer 16

Assets used up or services consumed in the process of generating revenues.

Question 17

faithful representation

or representational faithfulness

Answer 17

Recording an event in a manner that reflects the substance of the transaction

Question 18

fees earned

Answer 18

Revenue from providing services

Question 19

fees earned on account

Answer 19

Revenue from providing services when payment is received at a later date.

Question 20

financial accounting

Answer 20

The branch of accounting that is concerned with recording transactions using generally accepted accounting principles (GAAP) for a business or other economic unit and with a periodic preparation of various statements from such records.

Question 21

financial statements

Answer 21

Financial reports that summarize the effects of events on a business.

Question 22

general-purpose financial statements

Answer 22

A type of financial accounting report that is distributed to external users. The term “general purpose” refers to the wide range of decision-making needs that the reports are designed to serve.

Question 23

going concern assumption

Answer 23

An assumption that the business will continue for the foreseeable future.

Question 24

income statement or

statement of comprehensive income

Answer 24

A summary of the revenues and expenses for a specific period of time

Question 25

liability

Answer 25

An obligation to give up either services or assets

Question 26

management (or managerial) accounting

Answer 26

The branch of accounting that provides accounting information for internal users’ decision making

Question 27

manufacturing business

Answer 27

A business that changes basic inputs into products that are sold to customers

Question 28

materiality

Answer 28

Information is considered material if omitting it or misstating it could influence decisions that users make on the basis of financial information of an entity

Question 29

net income

Answer 29

The amount by which revenues exceed expenses

Question 30

merchandising business

Answer 30

A business that purchases products from other businesses and sells them to customers.

Question 31

net loss

Answer 31

The amount by which expenses exceed revenues

Question 32

owner’s equity

Answer 32

Assets less liabilities, being the amount that the owner is entitled to

Question 33

partnership

Answer 33

An unincorporated business form consisting of two or more persons conducting business as co-owners for profit

Question 34

prepaid expenses

Answer 34

Items such as supplies that will be used in the business in the future.

Question 35

private accounting

Answer 35

The field of accounting whereby accountants are employed by a business or a not-for-profit organization

Question 36

private enterprises

Answer 36

Profit-oriented organizations that do not issue shares or bonds through stock exchanges

Question 37

profit

Answer 37

The difference between the amounts received from customers for goods or services provided and the amounts paid for the inputs used to provide the goods or services.

Question 38

proprietorship

Answer 38

A business owned by one individual

Question 39

public accounting

Answer 39

The field of account¬ing where accountants and their staff provide services on a fee basis

Question 40

publicly accountable enterprises

Answer 40

Companies with shares or bonds listed on stock exchanges and other organizations, such as credit unions or investment dealers, that impact large or diverse groups of stakeholders

Question 41

relevance

Answer 41

Ability of financial informa¬tion to be helpful to investors and oth¬ers making financial decisions

Question 42

report form

Answer 42

The form of balance sheet that presents the liabilities and owner’s equity sections below the assets section

Question 43

revenue recognition principle

Answer 43

Revenue transactions that meet the recognition criteria, normally when goods are pro¬vided or services are performed

Question 44

revenues

Answer 44

Increases in owner’s equity as a result of selling services or products to custom

Question 45

sales

Answer 45

The total amount charged cus¬tomers for merchandise sold, including cash sales and sales on account

Question 46

service business

Answer 46

A business provid¬ing services rather than products to customers.

Question 47

statement of changes in equity | statement of owner’s equity statement of retained earnings

Answer 47

For companies reporting under IFRS, a summary of the changes in the owner’s equity that have occurred during a specific period of time

Question 48

statement of comprehensive income

Answer 48

under IFRS, a summary of the revenues and expenses for a specific period of time,

Question 49

timeliness

Answer 49

Ability of financial information to be produced on a timely basis so that it is helpful to investors and others making financial decisions

Question 50

understandability

Answer 50

Ability of information to improve the reader’s comprehension of financial information, such as notes to the financial statements

Question 51

verifiability

Answer 51

A characteristic of financial information such that the information can be confirmed by source documents

Question 51

4 financial statement

Answer 51

Income statement Statement of owners equity Balance statement Cash flow statement

Question 52

ALORE

Answer 52

``` Assets Liabilities Owners equity Revenue Expenses ```