AC 2000 Chapter 1 and 2 Terminology

Question 1

Liquidity

Answer 1

Cash, Ac/Rec, Supplies, Prepaid insurance, Equipment, Land
how quickly something can be converted into cash

Question 2

Solvency

Answer 2

how quickly you can pay off something with cash
Ac/Pay, ST Notes/Pay, Interest Payable, Unearned revenue, LT notes payable

Question 3

Uniform Chart of Accounts

Answer 3

Assets, Liabilities, Stockholder’s Equity, Dividends, Revenues, Expenses

Question 4

Assets

Answer 4

an economic resource of the firm that has control over it
(i.e Cash, Ac/Rec)

Question 5

Liabilities

Answer 5

something you owe to a company
(i.e. Ac/Pay, Unearned Revenue)

Question 6

Stockholder’s Equity

Answer 6

owed by the company to shareholders (i.e. Common Stock, Retained Earnings)

Question 7

Dividends

Answer 7

distribution of net income and return to shareholders (i.e. Cash dividends, stock dividend)

Question 8

Revenues

Answer 8

selling of inventory/providing a service that you’re in business to do (i.e. service revenue, consulting revenue, tuition)

Question 9

Expenses

Answer 9

costs incurred either directly or indirectly to generate revenue
(i.e. Wages Expense, Rent Expense)

Question 10

Trial Balance

Answer 10

Assets, Liabilities, Equity, Dividends, Revenues, and Expenses
Debits must equal credits
Starts with a header
a check of mathematical accuracy of journalizing, posting, and footing

Question 11

Income Statement

Answer 11

Revenues and Expenses
Revenues - Expenses = Net Income (Loss)

Question 12

Statement of Retained Earnings

Answer 12

Beginning of RE + Net Income (Loss) - Dividends = Ending RE

Question 13

Balance Sheet

Answer 13

Assets, Liabilities, and Equity
Debits = Credits
Assets = Liabilities and Equity

Question 14

Accounting Cycle