Week 1 Terms

Question 1

Event

Answer 1

Occurence which can be measured and change a businesses’ financial position

Question 2

Transaction

Answer 2

An event which has a monetary impact on a businesses’ financial state.

Question 3

Real Account (permanent)

Answer 3

Account which retains its balance and rolls forward

Question 4

Nominal account

Answer 4

Reports revenue, expenses, gains and losses. Added to real account at end of period.

Question 5

Journal

Answer 5

Detailed account which records all financial transactions.

Question 6

Posting

Answer 6

Transfer of debit and credit amount from journals to ledgers.

Question 7

Ledger

Answer 7

Collection of an entire group of similar accounts

Question 8

Trial balance

Answer 8

Checks and balances of gains and losses (GL) before making closing entries.

Question 9

Adjusting entries

Answer 9

Entries posted to systematically assign expenses and revenue by category.

Question 10

Closing entries

Answer 10

Final entries made to nominal (temp) account to achieve zero balance.

Question 11

Posting trial balance

Answer 11

Prepared after closing entries have been made to respective ledgers testing to see if debits equal credits on real accounts.

Question 12

Asset

Answer 12

What you own which can be liquidated.

Question 13

Liabilities

Answer 13

Monies owed.

Question 14

Distribution to Owner

Answer 14

Transferring assets to owners

Question 15

Revenues

Answer 15

Money coming in from core operations

Question 16

Expenses

Answer 16

Regular payments; ie Payroll.

Question 17

Gains

Answer 17

Other revenues with recurring or incidental income.

Question 18

Losses

Answer 18

Something sold for less than its value; post-event loss of revenue (natural disaster, etc.)

Question 19

Comparability

Answer 19

Placing or relating value to similar assets or liabilities.

Question 20

Consistency

Answer 20

Same methods of accounting management.

Question 21

Predictive value

Answer 21

Information used to ascertain what a future worth will be.

Question 22

Neutrality

Answer 22

Information within the financial statement is free from bias.

Question 23

Representational faithfullness

Answer 23

Financial statements must be produced to accurately reflect business conditions.

Question 24

Benefit exceeds Cost

Answer 24

Cost-Benefit analysis- the idea the benefit of acquisition of (X) is greater than the cost to obtain it.

Question 25

Timeliness

Answer 25

Financial accounting information is provided in a manner which allows investors to act on it.

Question 26

Verifiability

Answer 26

Financial accounting information which can be accurately confirmed.

Question 27

Materiality

Answer 27

Items on a financial statement large enough to be considered influential to economic decision making.

Question 28

Reliability

Answer 28

Trustworthiness of financial statements.

Question 29

Relevance

Answer 29

Useful, understandable, timely financial statement information.