ACC 111

Question 0

Assets

Answer 0

“Resources a business owns.” (p. 13)

Question 1

Accounting is . . .

Answer 1

“The information system that identifies, records, and communicates the economic events of an organization to interested users.” (p. 4)

Question 2

Balance Sheet

Answer 2

“A financial statement that reports the assets, liabilities, and owner’s equity at a specific date.” (p. 21)

Question 3

(Basic). Accounting Equation

Answer 3

“Assets = Liabilities + Owner’s Equity.” (p. 13)

Question 4

Bookkeeping

Answer 4

“A part of accounting that involves only the recording of economic events.”(p. 5)

Question 5

Convergence

Answer 5

“The process of reducing the differences between U. S. GAAP and IFRS.” (p. 9)
IFRS = International Financial Reporting Standards

Question 6

Corporation

Answer 6

“A business organized in a separate legal entity under state corporation law, having ownership divided into transferable shares of stock.” (p. 11)

Question 7

Drawings

Answer 7

“Withdrawal of cash or other assets from an unincorporated business for the personal use of the owner(s).” (p. 14)

Question 8

Economic entity assumption

Answer 8

“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.” (p. 10)

Question 9

Ethics

Answer 9

“The standards of conduct by which one’s actions are judged right or wrong, honest or dishonest, fair or not fair.” (p. 7)

Question 10

Expanded Accounting Equation

Answer 10

“Assets = Liabilities + Owner’s Capital - Owner’s Drawings + Revenues - Expenses”. (p. 14)

Question 11

Expenses

Answer 11

The cost of assets consumed or services used in the process of earning revenue.” (p. 14)

Question 12

Fair value principle

Answer 12

“An accounting principle stating that assets and liabilities should be reported at fair value (the price received to sell an asset or settle a liability).” (p. 9)

Question 13

Faithful representation

Answer 13

“Numbers and descriptions match what really existed or happened–they are factual.” (p. 9)

Question 14

Financial accounting

Answer 14

“The field of accounting that provides economic and financial information for investors, creditors, and other external users.” (p. 6)

Question 15

Financial Accounting Standards Board

Answer 15

“A private organization that establishes generally accepted accounting principles in the United States (GAAP).” (p. 9)

Question 16

Generally accepted accounting practices (GAAP)

Answer 16

“Common standards that indicate how to report economic events.” (p. 8)

Question 17

Historical cost principle

Answer 17

“An accounting principle that states that companies should record assets at their cost.” (p. 9)

Question 18

Income statement

Answer 18

“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.”

Question 19

International Accounting Standards Board (IASB)

Answer 19

“An accounting standard-setting body that issues standards adopted by many countries outside the United States.” (p. 9)

Question 20

International Financial Reporting Standards (IFRS)

Answer 20

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

Question 21

Investments by owner

Answer 21

“The assets an owner puts into a business.” (p. 13)

Question 22

Liabilities

Answer 22

“Creditor claims against total assets.” (p. 13)

Question 23

Managerial accounting

Answer 23

“The field of accounting that provides internal reports to help users make decisions about their companies.” (p. 6)

Question 24

Monetary unit assumption (Chpt 1 p. 10)

Answer 24

“An assumption stating that companies include in the accounting records only transaction data that can be expressed in terms of money.” (p. 10)

Question 25

Net income (Chpt 1 p. 23)

Answer 25

“The amount by which revenues exceed expenses.” (p. 23)

Question 26

Net loss (Chpt 1 p. 23)

Answer 26

“The amount by which expenses exceed revenues.” (p. 23)

Question 27

Owner’s equity

Answer 27

“The ownership claim on total assets.” (p. 13)

Question 28

Owner’s equity statement

Answer 28

“A financial statement that summarizes the changes in owner’s equity for a specific period of time.” (p. 21)

Question 29

Partnership

Answer 29

“A business owned by two or more persons associated as partners.” (p. 11)

Question 30

Proprietorship

Answer 30

“A business owned by one person.” (p. 10)

Question 31

Relevance

Answer 31

“Financial information that is capable of making a difference in a decision.” (p. 10)

Question 32

Revenues

Answer 32

“The gross increase in owner’s equity resulting from business activities entered into for the purpose of earning income.” (p. 13)

Question 33

Sarbanes-Oxley Act (SOK)

Answer 33

“Law passed by Congress intended to reduce unethical corporate behavior.” (p. 7)

Question 34

Securities and Exchange Commission (SEC)

Answer 34

A governmental agency that oversees U. S. financial markets and accounting standard-setting bodies.” (p. 9)

Question 35

Statement of cash flows

Answer 35

A financial statement that summarizes information about the cash inflows (receipts) and the cash outflows (payments) for a specific period of time.” (p. 21)

Question 36

Transactions

Answer 36

The economic events of a business that are recorded by accountants.” (p. 15)

Question 37

Account

Answer 37

A record of increases and decreases in specific asset, liability, and owner’s equity items.” (p. 54)

Question 38

Chart of Accounts

Answer 38

A list of accounts and the account numbers that identify their location in the Chart of Accounts.” (p. 65)

Question 39

Compound entry

Answer 39

A journal entry that involves three or more accounts.” (p. 60)

Question 40

Credit

Answer 40

The right side of the account.” (p. 54)

Question 41

Debit

Answer 41

The left side of account..” (p. 54)

Question 42

Double-entry

Answer 42

A system that records in appropriate accounts the dual effect of each transaction.” (p. 55)

Question 43

General Journal

Answer 43

“The most basic form of journal.” (p. 59)

Question 44

General Ledger

Answer 44

“A ledger that contains all asset, liability, and owner’s equity accounts.” (p. 62)

Question 45

Journal

Answer 45

“An accounting record in which transactions are initially

recorded in chronological order.” (p. 59)

Question 46

Journalizing

Answer 46

“The entering of transaction data in the journal.” (p. 59)

Question 47

Ledger

Answer 47

“The entire group of accounts maintained by a company.” (p. 62)

Question 48

Normal balance

Answer 48

“An account balance on the side where an increase in the

account is recorded.” (p. 55)

Question 49

Posting

Answer 49

“The procedure of transferring journal entries to the ledger accounts.” (p. 63)

Question 50

Simple entry

Answer 50

“A journal entry that involves only two accounts.” (p. 60)

Question 51

T-account

Answer 51

“The basic form of an account.” (p. 54)

Question 52

Three-column form of account

Answer 52

“A form with columns for debit, credit, and balance amounts in an account.” (p. 63)