Accounting 1 - Debits & Credits - Balance sheet

Question 1

GAAP

Answer 1

Generally AcceptedAccounting Principles.

Question 2

IFRS

Answer 2

International Financial Reporting Standards.

Question 3

balance sheet

Answer 3

It gives a glimpse into the health and composition of a business.

Question 4

Double-entry bookkeeping

Answer 4

A transaction requires at least two entries to keep the balance sheet balanced. (balance sheet related)

Question 5

Dual-aspect concept

Answer 5

If there is a change in the total amount of assets, there needs to be a resulting change in liabilities, equity, or both. (balance sheet related)

Question 6

Money-measurement concept

Answer 6

Only items expressed as monetary amounts can go on a balance sheet. (balance sheet related)

Question 7

Entity

Answer 7

A business, company, or organization.

Question 8

Entity concept

Answer 8

A business’ finances are separate from its owner’s finances. (entity related)

Question 9

Going-concern concept

Answer 9

Accounting assumes that an entity will operate indefinitely. (entity related)

Question 10

The three elements of a balance sheet are

Answer 10

assets, liabilities, and equity.

Question 11

Balance sheet equation

Answer 11

assets = liabilities + equity

Question 12

Balance sheet equation aka

Answer 12

accounting equation

Question 13

Fair value

Answer 13

The reasonable amount for which an item could be sold in the marketplace.

Question 14

Cost

Answer 14

The original amount paid for an item.

Question 15

Assets

Answer 15

Items owned and controlled by an entity, valuable to the entity, and acquired at a measurable cost.

Question 16

Current assets

Answer 16

are assets expected to be converted into cash or used up by the business within one year.

Question 17

Accounts Receivable

Answer 17

Where a company records credit purchases by its customers. The company expects these customers to pay them in cash in the near future. (current asset related)

Question 18

Inventory

Answer 18

Goods an entity intends to sell. (current asset related)

Question 19

Prepaid Expenses

Answer 19

Monies paid in advance for pending expenses?for example, paying rent in advance. (current asset related)

Question 20

Noncurrent assets

Answer 20

will not be used up or converted into cash for at least one year.

Question 21

Property, Plant and Equipment (PP&E)

Answer 21

Tangible assets that depreciate, or lose value, over time due to wear and tear. (Noncurrent asset related)

Question 22

Creditor

Answer 22

Anyone who lends money or extends credit.

Question 23

Liabilities

Answer 23

Debts owed to outside entities (creditors) in return for borrowed goods, services, or monies.

Question 24

Current Liabilities

Answer 24

Obligations that will be paid within one year. (Liabilities related)

Question 25

Long-Term Liabilities

Answer 25

Obligations that won?t be paid until at least a year has passed. (Liabilities related)

Question 26

Bank Loans (Bank Loan Payable)

Answer 26

Obligatory monies owed by an entity for goods and services. The opposite of Accounts Receivable.

Question 27

Estimated Tax Liability

Answer 27

The estimated amount of what will be due in taxes per year. (Liabilities related)

Question 28

Equity

Answer 28

Money (capital) either supplied by equity investors or collected in the form of an entity?s retained earnings.

Question 29

Paid-In Capital

Answer 29

Money supplied by investors. (Equity related)

Question 30

Retained Earnings

Answer 30

Income generated by an entity?s successful operations that is reinvested in the entity. (Equity related)

Question 31

Proprietorship

Answer 31

An entity with one sole owner and investor.