Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Acc > ACC-OU-Terms and what is-Exam #1 > Flashcards

ACC-OU-Terms and what is-Exam #1 Flashcards

1
Q

What are the three activities within accounting?

A

identification → recording —> communication

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What is GAAP?

A

is the standard that is generally accepted and practiced

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What is the historical cost principle?

A

Dictates that companies record assets at their cost

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What is the fair value principle?

A

States that assets and liabilities should be reported at fair value

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What is the monetary unit assumption?

A

Requires that companies include in the accounting records only transaction data that can be expressed in money terms

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What is the economic entity assumption?

A

Requires that activities of the entity be kept separate and distinct from activities of its owner and all other economic entities.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What is a partnership

A

Owned by two or more persons. Generally unlimited personal liability

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

what is a corporation?

A

Ownership is divided into shares of stock. limited liability

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What is a Proprietorship

A

Owned by one person.Owner gets profits, suffers losses and is personally liable for all debts

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What is the accounting equation?

A

Assets = liabilities + stockholders equity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What does the basic accounting equation do

A

Provides underlying framework for recording and summarizing economic transactions or events

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What are assets?

A

Resources a business owns. Things that provide future services or benefits

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What are liabilities?

A

Claims against assets (debts and obligations). Creditors ( party to whom made money)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What is Stockholders equity

A

Ownership claim on assets.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What increases stockholders equity

A

Investments and revenues

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What decreases stockholders equity

A

Dividends to stockholders
and Expenses

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What are dividends

A

The distribution of cash or other assets to stockholders

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

are Dividends an expense

A

no. Dividends reduce retained earnings

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

What are expenses

A

Are the cost of assets consumed or service used in the process of generating revenue

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

list accounts that are expenses

A

Salaries expense, Rent expense, Utilities expense, Tax expense,

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

What are transactions

A

Are business economic events recorded by accountants. Can be external or internal

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Event: purchasing a computer, should this event be recorded

A

yes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

What accounts consist in stockholders equity

A

Common stock + retained earnings

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

how do you calculate retained earnings

A

Revenues - expenses - dividends

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

what are THE FOUR FINANCIAL STATEMENTS

A

Income statement, Retained earnings statement, Balance sheet, Statement of cash flows

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

What is a income statement used for

A

Net income is needed to determine the ending balance in retained earnings

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

Income statement shows what time period

A

for the month ended

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

What is the retained earnings statement used for

A

Ending balance in retained earning is needed in preparing the balance sheet

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

retained earnings statement shows what time period

A

for the month ended

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

What is the balance sheet used for

A

Balance sheet and income statement are needed to prepared the statement of cash flows

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

what time period does a balance sheet show?

A

a snap shot or the date, like September 30 2022

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

What is the cash flow statement

A

Provides financial information about the cash receipts and payments for a specific time

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
33
Q

what time period does a statement of cash flows show?

A

for the month ended

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
34
Q

What is an income statement?

A

Reports the profitability of the company’s operations over a specific period of time.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
35
Q

what does a income statement have on it

A

It list revenues first then by expenses. Shows net income or loss

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
36
Q

What is a balance sheet

A

Reports assets, liabilities, and stockholders equity at a specific date (snapshot)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
37
Q

what does a balance sheet have on it

A

List assets at the top, then the liabilities and lastly the stockholders equity. Total assets MUST equal total liabilities and stockholders equity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
38
Q

What is statement of cash flows

A

Provides information about the cash receipts and payments for a specific period of time

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
39
Q

what is a debit entry system?

A

Each transaction must effect two or more accounts and crediting at least one other account

40
Q

What causes a debit balance

A

If the sum of debit entries are greater than the sum of credit entries the account will have a debit balance

41
Q

What causes a credit balance

A

Of the sum of credit entries are greater than the some of debit entries the account will have a credit balance

42
Q

for assets what increases and decreases with debit and credit

A

debit it increased + . Credit is negative -

43
Q

For liabilities what increases and decreases with debit and credit

A

Debit is decreased - . Credit is increased +

44
Q

For stockholders equity (common stock) what increases and decreases with debit and credit

A

Debit is decreased - . Credit is increased +

45
Q

For stockholders equity (retained earnings) what increases and decreases with debit and credit

A

Debit is decreased - . Credit is increased +

46
Q

For stockholders equity (revenues) what increases and decreases with debit and credit

A

Debit is decreased - . Credit is increased +

47
Q

For stockholders equity (expenses) what increases and decreases with debit and credit

A

Debit is increased +
. Credit is decreased -

48
Q

For stockholders equity (dividends) what increases and decreases with debit and credit

A

Debit is increased +. Credit is decreased -

49
Q

In summary of stockholders equity common stock, retained earnings, and revenues are debit decreases and credit increases.

A

While expenses and dividends increase in debit and credit decreases

50
Q

what is a normal balance

A

Normal balance is on the increased side

51
Q

List of accounts that are assets

A

Cash,
Accounts receivable,
Prepaid insurance,
Equipment,
Accumulated depreciation equipment

52
Q

List of accounts that are liabilities

A

Notes payable,
Accounts payable,
Unearned service revenue,
Salaries and wages payable,
Interest payable

53
Q

List accounts that are stockholders equity

A

Common stock,
Retained earnings,
Dividends,
Income summary

54
Q

List revenue accounts

A

Service revenue

55
Q

List expenses accounts

A

Supplies expense,
Depreciation expense,
Insurance expense,
Salaries and wages expense,
Rent expense,
Utilities expense,
Interest expense

56
Q

Seranio (entry): buying office equipment costing 5,000 by signing 3 month 12% 5,000 note payable

A

Account: equipment 5,000 (debit)
Account: notes payable 5,000 (credit)

57
Q

Seranio (entry): on october 2 pioneer receives a 1,200 cash advance from R Know ( a client) for advertising service that are expected to be completed by December 31

A

Oct 2
Account: cash 1,200 (debit)
Account: unearned service revenue 1,200 (credit)

58
Q

Scenario (entry): for monthly payment rent

A

Account: rent expense 900 (debit)
Account: cash 900 (credit)

59
Q

Scenario (entry): payment for insurance

A

Account: prepaid insurance 600 (debit)
Account: cash 600 (credit)

60
Q

Seraniro (entry): purchase of supplies on credit

A

Account: supplies 2,500 (debit)
Account: accounts payable 2,500 (credit)

61
Q

Seraniro (entry): company hires new employees on october 15. each employee receives a weekly salary of 500 for a 5 day work week, p[ayable every 2 weeks first payment is made on october 26

A

No journaling is needed because there was no transaction

62
Q

Scenario (entry): cash for services performed. Example, on october 26, pioneer owes employees salaries of 4,000 and pays them in cash

A

Account: salaries payable 4,000 (debit)
Account: cash 4,000 (credit)

63
Q

declaration and payment of dividend
Example, on october 31, pioneer board of directors declares and pays a 500 cash dividend to stockholders

A

Account: dividends 500 (debit)
Account: cash 500 (credit)

64
Q

what order is needed for a trail balance sheet

A

Assets, Liabilities, Then stockholders equity

65
Q

How are retained earnings calculated?

A

Beginning balance + Net income - dividends. Net income = revenues - expenses 90,000 - 20,000 - 10,000 - 35,000 = 25,000

66
Q

what is Accrual basis accounting

A

Companies recognize revenues when they perform services (rather than when they receive cash). Expenses are recognized when incurred (rather than when paid)

67
Q

what is Cash basis accounting

A

Revenues are recorded when cash is received. Expenses are recorded when cash is paid. is not in accordance with GAAP

68
Q

what is Revenues recognition principle

A

Revenue in the accounting period in which performance obligation is satisfied

69
Q

what is Expense recognition principle

A

Match expenses with revenues in the period when the company makes efforts to generate revenues

70
Q

What are adjusting entries needed for?

A

Ensure revenue recognition and expense recognition principles are followed

71
Q

what are the two Types of adjusting entries

A

Deferrals and Accruals

72
Q

what is Accrued revenues

A

revenues for services performed but not yet received in cash or recorded

73
Q

what are Accrued expenses

A

expenses incurred but not yet paid in cash or recorded

74
Q

What are PREPAID EXPENSES

A

Payments of expenses that will benefit more than on accounting period

75
Q

what are some examples if prepaid expenses

A

Insurance
Supplies
Advertising
Rent
Buildings and equipment

76
Q

Adjusting entry for prepaid expenses what increases and decreases for debit and credit

A

Debit increases to an expense account.
Credit decreases to an asset account

77
Q

Prepaid expenses entry for supplies used
Example, pioneer advertising inc purchased supplies costing 2,500 on oct 5. Pioneer recorded the purchases by increasing (debiting) the asset supplies. This account shows a balance of 2,500 in the october 31 trail balance. An inventory count at the close of business on oct 31 reveals that 1,000 of supplies are still on hand. How it would be recorded

A

Oct 31 account: supplies expense 1,500 (debit)
Account: Supplies 1,500

78
Q

Example for adjusting entry for insurance expired. Example, october 4 pioneer advertising inc paid 600 for a one year fire insurance policy coverage began on oct 1. Pioneer recorded the payment by increasing (debiting) prepaid insurance. This account show a balance of 600 in oct 31 trail balance. Insurance of 50 (600/12) expires each month
How it would be recorded

A

Oct 31 account: insurance expense 50 (debit)
Account: Prepaid insurance 50

79
Q

what are Depreciation on buildings (prepaid expenses)

A

Also called contra asset account. Buildings, equipment are considered assets rather than an expense on the date acquired

80
Q

Example for adjusting entry for depreciation
Example, pioneer advertising, assume that depreciation on the equipment is 480 a year or 40 per month (480/12)
What it would be recorded

A

Oct 31, account: depreciation expense 40 (debit)
Accumulated depreciation-equipment (credit)

81
Q

What is unearned revenue

A

Receipt of cash that is recorded as a liability because the service has not been performed

82
Q

what are some examples of unearned revenue accounts

A

Rent
Airline ticket
Magazine subscriptions
Customer deposits

83
Q

What do accruals record

A

Revenues for services performed by not yet recorded at the statement date or
Expenses incurred but not yet paid or recorded at the statement date

84
Q

What is accrued revenues

A

Revenues for services performed but not yet received in cash or recorded

85
Q

what are some examples of accrued revenues accounts

A

Rent
Interest
Services performed

86
Q

What does accrued revenues increase or decrease with debit or credit

A

Increases debits as an asset account and Increases credits a revenue account

87
Q

Example of accrual revenues for adjusting entry
Pioneer advertising inc performed services worth 200 that were not billed to clients in oct
What it looks like:

A

Oct 31 account: accounts receivable 200 (debit)
Service revenue 200 (credit)

88
Q

On November 10, pioneer receives cash of 200 for the services performed in oct
What it looks like:

A

Nov 10 account: Cash 200 (debit)
Account: accounts receivable 200 (credit)

89
Q

What are Accrued expenses

A

Expenses incurred but not yet paid in cash or recorded

90
Q

what are some examples of accrued expense accounts

A

Interest
Taxes
Salaries

91
Q

What does accrued expenses increase or decrease debit or credit

A

Increase debit as an expense account and
Increases credit as a liability account

92
Q

Example of accrued expenses (adjusting entry) for accrued interest
Pioneer advertising signed a three month not payable in the amount of 5,000 on october 1. The not requires pioneer to pay interest at an annual rate of 12%
So 5,000 * .12 * 1/12 = 50
What it would look like in entry

A

Oct 31 account: interest expense 50 (debit)
Interest payable 50 (credit)

93
Q

Accrued salaries
Example, pioneer paid salaries and wages on october 26 for the first two weeks oct 15-26. The next payment of salaries will not occur until november 9. The employees receive total salaries of 2,000 for a fice day work week, or 400 per day. This accrued salaries at oct 31 are 1,200 (400 * 3 days)
What it looks like:

A

oct 31 Account: Salaries and wages expense 1,200 (debit)
Salaries and wages payable 1,200 (credit)

94
Q

Why do you prepare an adjusted trial balance

A

Prepare after all adjusting entries are journalized and posted
Is the primary basis for the preparation of financial statements

95
Q

Where are financial statements from

A

They are prepared directly from the adjusting trial balance

Acc (2 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions