Final Exam-E1 Flashcards Preview

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Flashcards in Final Exam-E1 Deck (35):
1

as stated in the audit report (also called the Report of Independent Accountants), the primary responsibility for a company's financial statements lies with

the company's management

2

which of the following is true regarding the income statement

the income statement is sometimes called the statement of operations

3

which of the following is false regarding the balance sheet

the balance sheet does not report the changes in specific account balances over a period of time

4

when expenses exceed revenues in a given period

retained earnings are decreased

5

which of the following reports is filed annually with the SEC

Form 10-K

6

which of the following organizations write accounting rules

FASB, SEC, and IASB

7

what does an unqualified (unmodified) auditor's report indicate

the financial statements present fairly the financial position, the results of operations, and the changes in cash flows for the company

8

alternative names for the income statement

statement of operations, statement of earnings, statement of profit and loss

9

what does the concept of business entity mean in accounting

it means that the business is separate from the owners and the creditors and should be accounted for as a separate, independent entity

10

debit

left side of an account

11

credit

right side of an account

12

economic resources to be used or turned into cash within one year

current assets

13

reports assets, liabilities, and stockholders equity

balance

14

business transactions are accounted for separately from the transactions of the owners

separate entity assumption

15

increases assets; decrease liabilities and stockholders equity

debits

16

an exchange between an entity and other parties

transaction

17

the concept that businesses will operate into the foreseeable future

going concern assumption

18

decrease assets; increase liabilities and stockholders' equity

credits

19

the concept that assets should be recorded at the amount paid on the exchange date

historical costs

20

a standardized format used to accumulate data about each item reported on financial statements

account

21

amounts owed from cusomers

accounts receivable

22

the fundamental accounting model

assets=liabilities+stockholder's equity

23

represents the shares issued at par value

common stock

24

the account that is credited when the money is borrowed from a bank

notes payable

25

the concept that states that accounting information should be measured and reported in the national monetary unit without adjustment for changes in purchasing power

monetary unit assumption

26

cumulative earnings of a company that are not distributed to the owners

retained earnings

27

probable debts or obligations to be settled with assets or services

liabilities

28

every transaction has at least two effects on the accounting equation

dual effects

29

financing provided by owners and by business operations

stockholder's equity

30

useful information has predictive and feedback power

relevance

31

useful information should be complete, neutral, free from error

faithful representation

32

a legal amount per share that is set at the date of incorporation

par value

33

FASB creates

GAAP

34

failure to make an adjusting entry to recognize accrued salaries payable would cause which of the following

an understatement of expenses and liabilities and an overstatement of stockholders' equity

35

which of the following would normally not be found in the Notes to the Financial Statements

information that includes forward-looking statements