Exam 1

Question 1

The information system that identifies, records, and communicates that economic events of an organizatino to interested users.

Answer 1

Accounting

Question 2

The system of collecting and processing transaction data and communicating financial information to decision-makers.

Answer 2

Accounting information system.

Question 3

Resources a business owns.

Answer 3

Assets

Question 4

The examination of financial statements by a certified public accountant in order to express an opinion as to the fairness of presentation.

Answer 4

Auditing

Question 5

A financial statement that reports the assets, liabilities, and owner’s equity at a specific date.

Answer 5

Balance sheet

Question 6

Assets = Liabilities + Owner’s equity

Answer 6

Basic accounting equation

Question 7

A part of the accounting process that involves only the recording of economic events.

Answer 7

Bookkeeping

Question 8

A business organized as a separate legal entity under state corporation law, having ownership divided into transferable shares of stock.

Answer 8

Corporation

Question 9

The use of software and statistics to draw inferences from data.

Answer 9

Data analysis

Question 10

Withdrawal of cash or other assets from an unincorporated business for the personal use of the owner(s).

Answer 10

Drawings

Question 11

An assumption that requires that the activities of the entity be kept separate and distinct from the activities of its owner and all other economic entities.

Answer 11

Economic entity assumption

Question 12

The standards of conduct by which actions are judged as right or wrong, honest or dishonest, fair or not fair.

Answer 12

Ethics

Question 13

Assets = Liabilities + Owner’s capital - Owner’s drawings + Revenues - Expenses

Answer 13

Expanded accounting equation

Question 14

The cost of assets consumed or services used in the process of generating revenue.

Answer 14

Expenses

Question 15

An accounting principle stating that assets and liabilities should be reported at fair value (the price received to sell as asset or settle a liability).

Answer 15

Fair value principle

Question 16

Numbers and descriptions match waht really existed or happened - they are factual.

Answer 16

Faithful representation

Question 17

The field of accounting that provides economic and financial information for investors, creditors, and other external users.

Answer 17

Financial accounting

Question 18

A private organization that establishes generally accepted accounting principles (GAAP) in the United States.

Answer 18

Financial Accounting Standards Board (FASB)

Question 19

An area of accounting that uses accounting, auditing, and investigative skills to conduct investigations into theft and fraud.

Answer 19

Forensic accounting

Question 20

Common standards that indicate how to report economic events.

Answer 20

Generally acdepted accounting principles (GAAP).

Question 21

An accounting principle that states that companies should recordf assets at their cost.

Answer 21

Historical cost principle

Question 22

A financial statement that presents the revenues and expenses and resulting net income or net loss of a company for a specific period of time.

Answer 22

Income statement

Question 23

An accounting standard-setting body that issues standards adopted by many countries outside of the United States.

Answer 23

International Accounting Standards Boarf (IASB)

Question 24

International accounting standards set by the International Accounting Standards Board (IASB).

Answer 24

International Financial Reporting Standards (IFRS)

Question 25

The assets an owner puts into the business.

Answer 25

Investments by owner

Question 26

Creditor claims against total assets.

Answer 26

Liabilities

Question 27

An area of public accounting ranging from development of accounting and computer systems to support services for marketing projects and merger and acquisition activities

Answer 27

Management consulting

Question 28

The field of accounting that provides internal reports to help users make decisions about their companies.

Answer 28

Managerial accounting

Question 29

An assumption stating that companies include in the accounting records only transaction data that can be expressed in terms of money.

Answer 29

Monetary unit assumption

Question 30

The amount by which revenues exceed expenses.

Answer 30

Net income

Question 31

The amount by which expenses exceed revenues.

Answer 31

Net loss

Question 32

The ownership claim on total assets.

Answer 32

Owner's equity

Question 33

A financial statement that summarizes the changes in owner's equipty for a specific period of time.

Answer 33

Owner's equity statement

Question 34

A business owned by two or more persons associated as partners

Answer 34

Partnership

Question 35

A business owned by one person.

Answer 35

Proprietorship

Question 36

An area of accounting in which the accountant offers expert service to the general public.

Answer 36

Public accounting

Question 37

Financial information that is capable of making a difference in a decision.

Answer 37

Relevance

Question 38

The increases in assets or decreases in liabilities resulting from the sale of goods or the performance of services in the normal course of business.

Answer 38

Revenues

Question 39

Law passed by Congress intended to reduce unethical corporate behavior.

Answer 39

Sarbanes-Oxley Act (SOX)

Question 40

A governmental agency that oversees U.S. financial markets

Answer 40

Securities and Exchange Commission (SEC)

Question 41

A financial statement that summaries information about the cash inflows (receipts) and outflows (payments) for a specific period of time.

Answer 41

Statement of cash flows

Question 42

An area of public accounting involving tax advice, tax planning, preparing tax returns, and representing clients before governmental agencies.

Answer 42

Taxations

Question 43

The economic events of a business that arr recorded by accountants.

Answer 43

Transactions

Question 44

A record of increases and decreases in specific asset, liability, or owner's equity items.

Answer 44

Account

Question 45

A list of accounts and the account numbers that identify their location in the ledget.

Answer 45

Chart of Accounts

Question 46

A journal entry that involves three or more accounts

Answer 46

Compound entry

Question 47

The right side of an account.

Answer 47

Credit

Question 48

The left side of an account.

Answer 48

Debit

Question 49

A system that records in appropriate accounts the dual effect of each transaction.

Answer 49

Double-entry system

Question 50

The most basic form of a journal.

Answer 50

General journal

Question 51

A ledger that contains all asset, liability, and owner's equity accounts.

Answer 51

General ledger

Question 52

An accounting record in which transactions are initially recorded in chronological order.

Answer 52

Journal

Question 53

The entering of transaction data in the journal.

Answer 53

Journalizing

Question 54

The entire group of accounts maintained by a company.

Answer 54

Ledger

Question 55

An account balance on the side where an increase in the account is recorded.

Answer 55

Normal balance

Question 56

The procedure of transferring journal entries to the ledger accounts.

Answer 56

Posting

Question 57

A journal entry that involves only two accounts.

Answer 57

Simple entry

Question 58

The basic form of an account, consisting of (1) a title, (2) a left or debit side, and (3) a right or credit side.

Answer 58

T-account

Question 59

A form with columns for debit, credit, and balance amounts in an account.

Answer 59

Three-column form of account

Question 60

A list of accounts and their balances at a given time.

Answer 60

Trial balance.

Question 61

Accounting basis, in which companies record transactions that change a company's financial statements in the periods in which the events occur.

Answer 61

Accrual-basis accounting

Question 62

Adjusting entries for either accrued revenues or accrued expenses.

Answer 62

Accruals

Question 63

Expenses incurred but not yet paid in cash or recorded.

Answer 63

Accrued expenses

Question 64

Revenues for services performed but not yet received in cash or recorded

Answer 64

Accrued revenues

Question 65

A list of accounts and their balances after the company has made all adjustments.

Answer 65

Adjusted trial balance

Question 66

Entries made at the end of an accounting period to ensure that companies follow the revenue recognition and expense recognition principles.

Answer 66

Adjusting entries

Question 67

The difference between the cost of a depreciable asset and its related accumulated depreciation.

Answer 67

Book value

Question 68

An accounting period that extends from January 1 to December 31.

Answer 68

Calendar year

Question 69

Accounting basis in which companies record revenue when they receive cash and an expense when they pay out cash.

Answer 69

Cash-basis accounting

Question 70

Ability to compare the accounting information of different companies because they use the same accounting principles.

Answer 70

Comparability

Question 71

Use of the same accounting principles and methods from year to year within a company.

Answer 71

Consistency

Question 72

An account offset against an asset account on the balance sheet.

Answer 72

Contra asset account

Question 73

Constraint that weighs the cost that companies will incur to provide the information against the benefit that financial statement users will gain from having the information available.

Answer 73

Cost constraint

Question 74

Adjusting entries for either prepaid expenses or unearned revenues.

Answer 74

Deferrals

Question 75

The process of allocating the cost of an asset to expense over its useful life.

Answer 75

Depreciation

Question 76

An assumption that every economic entity can be separately identified and accounted for.

Answer 76

Economic entity assumption

Question 77

The principle that companies recognize expense int he period in which the companies make efforts (consume assets or incur liabilities) to generate revenue.

Answer 77

Expense recognition principle

Question 78

An accounting principle that assets and liabilities should be reported at fair value (the price received to sell an asset or settle a liability).

Answer 78

Fair value principle

Question 79

Information that accurately depicts what really happened.

Answer 79

Faithful representation

Question 80

An accounting period that is one year in length.

Answer 80

Fiscal year

Question 81

An accounting principle that dictates that companies disclose circumstances and events that make a difference to financial sratement users.

Answer 81

Full disclosure principle

Question 82

The assumption that th company will continue in operation for the foreseeable future.

Answer 82

Going concern assumption

Question 83

An accounting prinfciple that statrs that companies should record assets at their cost.

Answer 83

Historical cost principle

Question 84

Monthly or quarterly accounting time periods.

Answer 84

Interim periods

Question 85

A company-specific aspect of relevance. An item is material when its size makes it likely to influence the decision of an investor or creditor.

Answer 85

Materiality

Question 86

An assumption that requires that only those things that can be expressed in money are included in the accounting records.

Answer 86

Monetary unit assumption

Question 87

Future expenses paid in cash before they are used or consumed.

Answer 87

Prepaid expenses (prepayments)

Question 88

The quality of information that indicates the information makes a difference in a decision.

Answer 88

Relevance.

Question 89

The principle that companies recognize revenue in the accounting period in which the performance obligation is satisfied.

Answer 89

Revenue recognition principle

Question 90

Describes information that is available to decision-makers before it loses its capacity to influence decisions.

Answer 90

Timely

Question 91

An assumption that accountants can divide the economic life of a business into artificial time periods.

Answer 91

Time period assumption

Question 92

Describes information that is presented in a clear and concise fashion so that users can interpret it and comprehend its meaning.

Answer 92

Understandability

Question 93

A liability recorded for cash received before services are performed.

Answer 93

Unearned revenues.

Question 94

The length of a service of a long-live asset.

Answer 94

Useful life

Question 95

Describes information that occurs when inependent observers, using the same methods, obtain similar results.

Answer 95

Verifiable