Accounting Chapter 1

Question 1

What prohibits you from logging your person assets into your company’s balance sheet?

Answer 1

The economic entity assumption

Question 2

Why do you mark a house at the value you bought it for and not what it’s worth now?

Answer 2

Historic cost principal
or
The cost principle

Question 3

Why does a company record all of its financial statements in USD?

Answer 3

The monetary unit assumption

Question 4

What is it when you expect a company to remain in operation for the foreseeable future

Answer 4

The going concern assumption

Question 5

What does SEC stand for

Answer 5

The securities and exchange commission

internal

Question 6

What is sole proprietorship

Answer 6

Owner is referred to as a proprietor

Question 7

What is faithful representation

Answer 7

Asserts that accounting information should be complete, neutral, and free form material error.

Question 8

Partnership

Answer 8

Has two or more owners (partners)

Question 9

What is IFRS

Answer 9

Set of global accounting guidelines formulated by the IASB

Question 10

What is a corporation?

Answer 10

Type of entity that is designed to limit personal liability exposure of owners to entity’s debts

Question 11

What does audit mean?

Answer 11

An examination of a company’s financial statements and records

Question 12

What is FASB

Answer 12

Financial accounting standards board

Question 13

What is a creditor

Answer 13

Person or business lending money

Question 14

What’s is an SEC

Answer 14

US government agency that oversees the US financial markets

Question 15

Accounting equation

Answer 15

Assets = Liabilities + equity

Question 16

Assets

Answer 16

The economic recourses that is expected to be benefit in the future

Question 17

Balance sheet

Answer 17

Reports on an entity’s revenues, expenses, and net income or loss for the period

Question 18

Expenses

Answer 18

Decreases in equity that occur in the course of selling goods or services

Question 19

Income statement

Answer 19

Reports on an entity’s revenues, expenses and net income or loss for the period

Question 20

Liabilities

Answer 20

Debts that are owed to creditors

Question 21

Net income

Answer 21

Excess of total revenues over total expenses

Question 22

Net loss

Answer 22

Excess in total expenses over total revenues

Question 23

Revenue

Answer 23

Increase in equity that occur in the course of selling goods and services

Question 24

Statement of cash flow

Answer 24

Reports on a business’s cash receipts and cash payments during a period

Question 25

Statement of retained earnings

Answer 25

Report how the company’s retained earnings balance changed from the beginning to the end of the period