Accounting Chapter 1

Question 1

The main U.S. Accounting rule book and is currently created and governed by the FASB

Answer 1

Generally accepted principles - GAAP

Question 2

The information system that measures business activities, processes the information into reports, and communicates the results to decision makers

Answer 2

Accounting

Question 3

Provides information for external decision makers, such as outside investors, lenders, customers, and the federal government.

Answer 3

Financial accounting

Question 4

Focuses on the information for internal decision makers, such as the company’s managers and employees.

Answer 4

Managerial accounting

Question 5

People who have some ownership interest often provide the money to get A business going

Answer 5

Investors

Question 6

Any person or business to whom a business owes money.

Answer 6

Creditor

Question 7

Licensed professional accountants who serve the general public.

Answer 7

Certified public accountants -CPA

Question 8

Certified professionals who specialize in accounting and financial management knowledge. They also work for a single company.

Answer 8

Certified management accountants - CMA

Question 9

Work with individuals to help them budget I plan for retirement save for education, and manage their finances

Answer 9

Certified financial planner- CFP

Question 10

A privately funded organization, oversees the creation governance of accounting standards.

Answer 10

Financial accounting standards board - FASB

Question 11

The U.S. Governmental agency that oversees the U.S. Financial markets.

Answer 11

Securities and exchange commission - SEC

Question 12

The main U.S. Accounting rule book and is currently created and governed by the FASB.

Answer 12

Generally accepted accounting principles - GAAP

Question 13

A basic concept in accounting. An organization that stands apart as a separate economic unit.

Answer 13

Economic entity assumption

Question 14

A business with a single owner.

Answer 14

Sole proprietorship

Question 15

A business with two or more owners organized as a corporation

Answer 15

Partnership

Question 16

A business organized state under law that is a separate legal entity.

Answer 16

Corporation

Question 17

A company in which each member is only liable for his or her own actions

Answer 17

Limited liability company - LLC

Question 18

Acquired assets and services should be recorded At their actual cost (also called historical cost).

Answer 18

Cost principle

Question 19

This assumes that the entity will remain in operation for the foreseeable future.

Answer 19

Going concern consumption

Question 20

Requires that the items on the financial statements be measured in terms of a monetary unit.

Answer 20

Monetary unit assumption

Question 21

An examination of a company’s financial statements and records.

Answer 21

Audit

Question 22

Assets = labilities + equity

Answer 22

Accounting equation

Question 23

Debts that are owed to creditors.

Answer 23

Liabilities

Question 24

The amount of assets that are left over after the company has paid its liabilities

Answer 24

Equity

Question 25

Owner contributions to a corporation.

Answer 25

Contributed capitals

Question 26

Represents the basic ownership of every corporation.

Answer 26

Common stock

Question 27

The equity earned by profitable operations that is not distributed to stockholders

Answer 27

Retained earnings

Question 28

A profitable corporation may make distributions to stockholders in the form of what? They can also be pond in the form of cash, stock, or other property.

Answer 28

Dividends

Question 29

Earnings that result from goods or services to customers.

Answer 29

Revenue

Question 30

Costs of selling goods or services.

Answer 30

Expenses

Question 31

When total revenues are greater than total expenses.

Answer 31

Net income

Question 32

Occurs when total expenses are greater than total revenues

Answer 32

Net loss

Question 33

Beginning equity + issuance of common stock - dividends distributed + revenues - expenses =?

Answer 33

Ending equity

Question 34

Any event that affects the financial position of the business a can be measured with faithful representation.

Answer 34

Transaction

Question 35

Short-term liability that will be paid in the future.

Answer 35

Accounts payable

Question 36

The right to receive cast in the future from customers for goods sold for or services performed.

Answer 36

Accounts receivable

Question 37

Business documents that are used to communicate information needed to make business decisions.

Answer 37

Financial statement

Question 38

Presents a summary of a business entity’s revenues, and expenses for a period of time, such as a month, quarter, or year. Also known as the statement of earnings.

Answer 38

Income statement

Question 39

Shows the changes in retained earnings for a business entity during a time period, such as a mouth, quarter, or year.

Answer 39

Statement of retained earnings.

Question 40

Shows the changes in retained earnings for a business entity during a time period, such as a mouth, quarter, or year.

Answer 40

Statement of retained earnings.

Question 41

Lists a business entity’s assets, labilities, and stockholders’ equity as of a specific date, usually the end of a month, quarter, or year.

Answer 41

Balance sheet

Question 42

Reports the cash coming in (positive amounts) and the cash going out (negative amounts) during a period.

Answer 42

Statement of cash flow

Question 43

Measures how profitably a company its uses assets

Answer 43

Return on assets - ROA

Question 44

Return on assets = Net income/average total assets
Average total assets = (beginning total assets + ending total assets )/2

Answer 44

Return on assets - ROA formula