Reversed Chapter (1)

Question 1

The form of balance sheet that resembles the basic format of the accounting equation; with assets on the left side and Liabilities and Stockholder’s Equity sections on the right side.

Answer 1

account form

Question 2

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

Answer 2

accounting

Question 3

A list of the assets; liabilities; and owner’s equity as of a specific date; usually at the close of the last day of a month or a year.

Answer 3

balance sheet

Question 4

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

Answer 4

business

Question 5

A concept of accounting that limits the economic data in the accounting system to data related directly to the activities of the business.

Answer 5

business entity concept

Question 6

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

Answer 6

business transaction

Question 7

The process of transferring temporary accounts balances to permanent accounts at the end of the accounting period.

Answer 7

Commission

Question 8

The stock outstanding when a corporation has issued only one class of stock.

Answer 8

common stock

Question 9

A business organized under state or federal statutes as a separate legal entity.

Answer 9

corporation

Question 10

A concept of accounting that determines the amount initially entered into the accounting records for purchases.

Answer 10

cost concept

Question 11

Distribution of a corporation’s earnings to stockholders.

Answer 11

dividends

Question 12

The amount by which revenues exceed expenses.

Answer 12

earnings

Question 13

An integrated business and information system used by companies to plan and control both internal and supply chain operations.

Answer 13

equity

Question 14

Moral principles that guide the conduct of individuals.

Answer 14

ethics

Question 15

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

Answer 15

expenses

Question 16

Revenue from providing services.

Answer 16

fees earned

Question 17

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.

Answer 17

financial accounting

Question 18

The authoritative body that has the primary responsibility for developing accounting principles.

Answer 18

Financial Accounting Standards Board (FASB)

Question 19

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

Answer 19

financial statements

Question 20

Generally accepted guidelines for the preparation of financial statements.

Answer 20

generally accepted accounting principles (GAAP)

Question 21

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.

Answer 21

general-purpose financial statements

Question 22

A summary of the revenue and expenses for a specific period of time; such as a month or a year.

Answer 22

income statement

Question 23

Money received for interest.

Answer 23

interest revenue

Question 24

An organization that issues International Financial Reporting Standards for many countries outside the United States.

Answer 24

International Accounting Standards Board (IASB)

Question 25

The rights of creditors that represent debts of the business.

Answer 25

liabilities

Question 26

A business form consisting of one or more persons or entities filing an operating agreement with a state to conduct business with limited liability to the owners; yet treated as a partnership for tax purposes.

Answer 26

limited liability company (LLC)

Question 27

method A method of valuing inventory that reports the inventory at the lower of its cost or current market value (replacement cost).

Answer 27

management

Question 28

A type of business that changes basic inputs into products that are sold to individual customers.

Answer 28

manufacturing business

Question 29

The comprehensive budget plan linking all the individual budgets related to sales; cost of goods sold; operating expenses; projects; capital expenditures; and cash.

Answer 29

matching concept

Question 30

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

Answer 30

merchandising business

Question 31

An approach to transfer pricing that allows managers of decentralized units to agree (negotiate) among themselves as to the transfer price.

Answer 31

net income

Question 32

The amount by which expenses exceed revenues.

Answer 32

net loss

Question 33

A concept of accounting that requires accounting records and the data reported in financial statements to be based on objective evidence.

Answer 33

objectivity concept

Question 34

The owner’s right to the assets of the business.

Answer 34

owner’s equity

Question 35

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

Answer 35

partnership

Question 36

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

Answer 36

prepaid expenses

Question 37

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

Answer 37

private accounting

Question 38

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.

Answer 38

profit

Question 39

A business owned by one individual.

Answer 39

proprietorship

Question 40

The field of accounting where accountants and their staff provide services on a fee basis.

Answer 40

public accounting

Question 41

Public Company Accounting Oversight Board (PCAOB) A new oversight body for the accounting profession that was established by the Sarbanes- Oxley Act.

Answer 41

Public Company Accounting Oversight Board (PCAOB)

Question 42

A leverage ratio that measures the margin of safety of long-term creditors; calculated as the net fixed assets divided by the long-term liabilities.

Answer 42

ratio of liabilities to stockholders’

Question 43

Money received for rent.

Answer 43

rent revenue

Question 44

Net income retained in a corporation.

Answer 44

retained earnings

Question 45

A summary of the changes in the retained earnings in a corporation for a specific period of time; such as a month or a year.

Answer 45

retained earnings statement

Question 46

Increases in assets from performing services or delivering products to customers.

Answer 46

revenues

Question 47

The total amount charged customers for merchandise sold; including cash sales and sales on account.

Answer 47

sales

Question 48

The relative distribution of sales among the various products available for sale.

Answer 48

Sarbanes-Oxley Act

Question 49

An act passed by Congress to restore public confidence and trust in the financial statements of companies.

Answer 49

Securities and Exchange

Question 50

A business providing services rather than products to customers.

Answer 50

service business

Question 51

A summary of the cash receipts and cash payments for a specific period of time; such as a month or a year.

Answer 51

statement of cash flows

Question 52

The owners’ equity in a corporation.

Answer 52

stockholders’ equity

Question 53

A concept of accounting requiring that economic data be recorded in dollars.

Answer 53

unit of measure concept