Accounting Test 1

Question 1

a system of gathering financial information about a business and reporting this information to users.

Answer 1

accounting

Question 2

6 steps in accounting process…IN ORDER

Answer 2

1. Analyzing
2. Recording
3. Classifying
4. Summarizing
5. Reporting
6. Interpreting

Question 3

amount a business charges customers for products sold or services performed

Answer 3

revenue

Question 4

revenue _________ owner’s equity & assets

Answer 4

increases

Question 5

any accounting period of 12 months

Answer 5

fiscal year

Question 6

fiscal year can coincide with….

Answer 6

calendar year

Question 7

concept that income determination can be made on a periodic basis

Answer 7

accounting period concept

Question 8

3 financial statements

Answer 8

income statement
statement of owner’s equity
balance sheet

Question 9

income statement is also called…

Answer 9

profit & loss statement …..

operating statement

Question 10

reports profitability of business operations for a specific period of time.

Answer 10

income statement

Question 11

reports activities that affected owner’s equity for a specific period of time

Answer 11

statement of owner’s equity

Question 12

reports a firm’s assets, liabilities, & owner’s equity

Answer 12

balance sheet

Question 13

the relationship between the 3 basic accounting elements…

Answer 13

accounting equation

Question 14

nonbusiness assets and liabilities are NOT included in the business accounting records

Answer 14

business entity concept

Question 15

the most common liability …an unwritten promise to pay a supplier for assets purchased or services received

Answer 15

account payable

Question 16

formal written promise to pay supplier or lenders specified sums of money at definite future times

Answer 16

notes payable

Question 17

the amount of money owed to the business by its customers as a result of making sales on account or credit

Answer 17

accounts receivable

Question 18

bookkeepers focus on the ______________

Answer 18

processing of accounting data…

Question 19

accountants design the _________

Answer 19

accounting information system

Question 20

an economic event that has a direct impact on the business

Answer 20

business transaction

Question 21

3 basic questions to analyze business transactions

Answer 21

1. What happened?
2. Which accounts are affected?
3. How is accounting equation affected?

Question 22

if total revenues are greater than total expenses for a period, the EXCESS is the ____________

Answer 22

net income

Question 23

if total expenses are greater than total revenues for the period, the EXCESS is _________-

Answer 23

net loss

Question 24

balance sheet is also known as…

Answer 24

statement of financial position

statement of financial condition

Question 25

side of the account that is used to INCREASE the account

Answer 25

normal balance

Question 26

total of the dollar amount on debit & credit sides

Answer 26

footings

Question 27

differences between footings is called

Answer 27

balance

Question 28

GAAP means

Answer 28

GENERALLY

Accepted accounting principles