Accounting

Question 1

Accounting is what

Answer 1

A process of identifying, recording, summarizing, and reporting (in monetary terms) information about an organization during a specific period of time

Question 2

Reporting requirements are established by

Answer 2

FASB

Question 3

What are the reporting requirements established by FASB called

Answer 3

GAAP

Generally accepted account principles

Question 4

List the GAAPs

Answer 4

Identification of the entity 
Matching principle 
Identification of the cost of any quantifiable resource
Availability of objective evidence
Acceptance of materiality 
Trust in full disclosure
Application of consistency

Question 5

Cash based accounting

Answer 5

Revenue is recorded when cash is received

Expenses are recorded when bills are paid

Question 6

Accrual accounting

Answer 6

Revenue is recorded within the period it is earned, but not necessarily collected
Expenses are recorded in the period when resources are consumed

Question 7

Revenue =

Answer 7

gross income (before anything is taken out or paid)

Question 8

Financial statement =

Answer 8

reports that present several kinds of summative information about an organization’s revenues and expenses in standard formats

Question 9

Core statements are:

Answer 9

Balance sheet
Income statement
Cash flow statement
Retained earnings statement

Question 10

Core statements - Balance sheet:

Answer 10

A statement of an organization’s financial condition

Total assets = total liabilities + owner’s equality

Question 11

Core statements - Income statement

Answer 11

A report on an organization’s financial performance over a specific period of time
Compares money earned (revenue) to money spent (expenses)

Question 12

Core statements - Cash flow statement

Answer 12

Shows how an organization’s cash position changes over time

Reports on the actual cash, not future incoming or outgoing cash

Question 13

Core statements - Retained earnings statements

Answer 13

Provides additional details on how owner’s equity changed and information on how profits are used in business

Question 14

Accounting conventions

Answer 14

Rounding off to nearest dollar
Double lines under final figure statement
Parentheses to indicate negative number or loss
Dollar sign used only with top and bottom figures

Question 15

Fund accounting

Answer 15

A form in financial oversight that is often found in not-for-profit hospitals and health care organizations
A specific fund is set up when funds are provided for a specific purpose (like a donation to support rehab)

Question 16

An account =

Answer 16

A listing of all of an organization’s accounts by title and corresponding numerical code to classify and differentiate between accounts

Question 17

Chart of accounts =

Answer 17

Foundation for accounting information systems within an organization

Question 18

Ledger =

Answer 18

a book of accounts

When a transaction occurs, it is recorded in a ledger in two places - Double entry