ACG 2021 1-3

Question 1

Accounting

Answer 1

A system of maintaining records of a company’s operations and communicating that information to decision makers

Question 2

Financial Accounting

Answer 2

Measurement of business activities of a company and communication of those measurements to external parties for decision-making purposes

Question 3

Corporation

Answer 3

An entity that is legally separate from its owners

Question 4

Partnership

Answer 4

A business owned by two or more persons

Question 5

Sole proprietorship

Answer 5

A business owned by one person

Question 6

Assets

Answer 6

Resources of a company

Question 7

Liabilities

Answer 7

Amounts owed to creditors

Question 8

Stockholders’ equity, Stockholders’, or owners’

Answer 8

claims to resources, which equal the difference between total assets and total liabilities

Question 9

Accounting Equation

Answer 9

The equation that shows a company’s resources (assets) equal creditors’ and owners’ claims to those resources (liabilities and stockholders’

Question 10

Expenses

Answer 10

Costs of providing products and services

Question 11

Revenues

Answer 11

Amounts recorded when the company sells products or services to customers

Question 12

Net Income

Answer 12

Difference between revenues and expenses

Question 13

Dividends

Answer 13

Distributions by a corporation to its stockholders

Question 14

Financial Statements

Answer 14

Periodic reports published by the company for the purpose of providing information to external users

Question 15

Income Statement

Answer 15

A financial statement that reports the company’s revenues and expenses over an interval of time

Question 16

Statement of stockholders’ equity

Answer 16

A financial statement that summarizes the changes in stockholders’ equity over an interval of time

Question 17

Balance sheet

Answer 17

A financial statement that presents the financial position of the company on a particular date

Question 18

Statement of cash flows

Answer 18

A financial statement that measures activities involving cash receipts and cash payments over a period of time

Question 19

Generally accepted accounting principles (GAAP)

Answer 19

The rules of financial accounting

Question 20

Financial Accounting Standards Board (FASB)

Answer 20

AN independent, private body that has primary responsibility for the establishment of GAAP in the United States

Question 21

International Accounting Standards Board (IASB)

Answer 21

The body primarily responsible for creating a single set of global accounting standards

Question 22

International Financial Reporting Standards (IFRS)

Answer 22

The accounting rules set by the International Accounting Standards Committee (IASC) and currently set by the International Accounting Standards Board (IASB)

Question 23

Auditors

Answer 23

Trained individuals hired by a company as an independent party to express a professional opinion of the conformity of that company’s financial statements with GAAP

Question 24

Sarbanes-Oxley Act

Answer 24

Known as the Public Company Accounting Reform and Investor Protection Act of 2002 and commonly referred to as SOX; the act established a variety of guidelines related to auditor-client relations and internal control procedures

Question 25

Accounting Cycle

Answer 25

Full set of procedures used to accomplish the measurement/communication process of financial accounting.

Question 26

External Transactions

Answer 26

Transactions the firm conducts with a separate economic entity

Question 27

Internal Transactions

Answer 27

Events that affect the financial position of the company but do not include an exchange with a separate economic entity.

Question 28

Account

Answer 28

A summary of the effects of all transactions related to a particular item over a period of time

Question 29

Chart of accounts

Answer 29

A list of all account names used to record transactions of a company

Question 30

Revenue Recognition Principle

Answer 30

Record revenue in the period in which we provide goods and services to customers

Question 31

Debit

Answer 31

The LEft side of an account. Indicates an increase in asset, expense, or dividend accounts, and a decrease to liability, stockholders' equity, or revenue accounts.

Question 32

Credit

Answer 32

The right side of an account. Indicates a decrease to an asset, expense, or dividend accounts, and an increase to liability, stockholders' equity, or revenue accounts

Question 33

Journal

Answer 33

A chronological record of all transactions affecting a firm

Question 34

Journal Entry

Answer 34

The format used for recording business transactions

Question 35

Posting

Answer 35

The process of transferring the debt and credit information from the journal to individual accounts in the general ledger

Question 36

General Ledger

Answer 36

A single location that provides a list of transactions affecting each account and the account's balance

Question 37

T - Account

Answer 37

A simplified form of a general ledger account with space at the top for the account title, one side for recording debits, and one side for recording credits

Question 38

Trial balance

Answer 38

A list of all accounts and their balances at a particular date, showing that total debits equal total credits

Question 39

Accrual-Basis Accounting

Answer 39

Record revenues when goods and services are provided to customers, and record expenses with related revenues

Question 40

Matching Principle

Answer 40

Recognize expenses in the same period as the revenues they help to generate

Question 41

Cash-basis Accounting

Answer 41

record revenues at the time cash are received and an expense at the time cash is paid

Question 42

Adjusting Entries

Answer 42

Entries used to record events that occur during the period but that have not yet been recorded by the end of the period

Question 43

Prepaid Expenses

Answer 43

The costs of assets acquired in one period that will be expensed in a future period

Question 44

Depreciation

Answer 44

The process of allocating the cost of a long-term asset to expense over its useful life

Question 45

Contra Account

Answer 45

An account with a balance that is opposite, or "contra," to that of its related accounts

Question 46

Deferred Revenues

Answer 46

When a company receives cash in advance from a customer for products or services to be provided in the future.

Question 47

Accrued Expense

Answer 47

When a company has incurred an expense but hasn't yet paid cash or recorded an obligation to pay

Question 48

Adjusted Trial Balance

Answer 48

A list of all accounts and their balances after we have updated account balances for adjusting entries.

Question 49

Classified Balance sheet

Answer 49

A balance sheet that groups a company's assets into current assets and long-term assets and that separates liabilities into current liabilities and long-term liabilities.

Question 50

Temporary Accounts

Answer 50

All revenue, expense, and dividend accounts; account balances are maintained for a single period and then closed (or zeroed out) and transferred to the balance of the retained earnings account at the end of the period

Question 51

Permanent Accounts

Answer 51

All accounts that appear in the balance sheet; account balances are carried forward from period to period

Question 52

Closing Entries

Answer 52

Entries that transfer the balances of all temporary accounts (revenues, expenses, and dividends) to the balance of the Retained Earnings account

Question 53

Post-closing trial balance

Answer 53

A list of all accounts and their balances at a particular date after we have updated account balances for closing entries.