Ch. 1

Question 1

Accounting information is based on actual cost, an objectively determined number

Answer 1

Measurement (Cost) Principle

Question 1

Events

Answer 1

Refer to happening that affect the accounting equation and are reliably measured

Question 2

Identifies cash inflows (receipts) and cash outflows (payments) over a period of time.

Answer 2

Statement of cash flows

Question 2

Measurement (Cost) Principle

Answer 2

Accounting information is based on actual cost, an objectively determined number

Question 3

Owner Investments

Answer 3

Resources such as cash that an owner puts into the company and are included under the generic account Owner, Capital.

Question 4

Return

Answer 4

Often linked to net income. Stated in a ratio form as income divided by assets invested.

Question 5

Statement of owner’s equity

Answer 5

Explains changes in equity from net income (or loss) and from any owner investments and withdrawals over a period of time

Question 6

Examples of Liabilities

Answer 6

Accounts payable, notes payable, taxes payable, wages payable, creditors’ claims on assets/amount company owes. Anytime you see the word payable, it is a liability

Question 6

Full Disclosure Principle

Answer 6

Prescribes that a company report the details behind financial satements that would impact users’ decisions.

Question 6

Shares (Stock)

Answer 6

Ownership of all corporations is divided into units

Question 6

Assets

Answer 6

Resources are resources a company owns or controls. These resources are expected to yield future benefits.

Question 6

Net loss

Answer 6

Occurs when expenses exceed revenues, which decrease equity

Question 6

Internal Transactions

Answer 6

Exchanges within an entity, which may or may not affect the accounting equation

Question 7

Going-Concern Assumption

Answer 7

Assumption that the business will continue operating instead of be closed or sold

Question 8

Revenues

Answer 8

Sales of products or services to customers. Increaes equity (via net income) and result from a company’ earning activities.

Question 9

FASB

Answer 9

Financial Accounting Standars Boards

private sector group that sets rules and principles

Question 9

Explains changes in equity from net income (or loss) and from any owner investments and withdrawals over a period of time

Answer 9

Statement of owner’s equity

Question 9

Income Statement

Answer 9

Describes a company’s revenues and expenses along with the reulting net income or loss over a period of tim due to earning activities.

Question 10

International Financial Reporting Standards

Answer 10

Identify preferred accounting practices

created by IASB

Question 10

Sales of products or services to customers. Increaes equity (via net income) and result from a company’ earning activities.

Answer 10

Revenues

Question 11

Cost Benefit Constraints

Answer 11

Prescribes that only information with benefits of disclosure greater than the costs of providing it need be disclosed

Question 12

Ownership of all corporations is divided into units

Answer 12

Shares (Stock)

Question 13

Equity

Answer 13

Owner’s claim on assets, and is equal to assets minus liabilties. Also called net assets or reisdual equity.

For a noncorporate entity, owner investments and revenues increase equity whereas owner qithdrawals and expenses decrease equity.

Question 14

Bonds

Answer 14

Written promises by organizations to repay amounts loaned with interest

Question 15

The uncertainty about the return we will earn.

Answer 15

Risk

Question 16

Refer to happening that affect the accounting equation and are reliably measured

Answer 16

Events

Question 17

Resources are resources a company owns or controls. These resources are expected to yield future benefits.

Answer 17

Assets

Question 19

An information and measurement system that identifies, records, and communicates relevant,r reliable, and comparable information about an organizations business activities

Answer 19

Accounting

Question 20

Exchanges within an entity, which may or may not affect the accounting equation

Answer 20

Internal Transactions

Question 21

The cost necessary to earn revenues. Decrease equity.

Answer 21

Expenses

Question 21

Corporation

Answer 21

A business legally separate from its owners, meaning it is responsible for its own acts and debts. Has a separate legal status which means it can conduct business with the rights, duties, and responsibilities of a person.

Question 22

## Footnote Only information that would influence the decisions of a reasonable person should be disclosed

Answer 22

Materiality Constraint

Question 23

Owner's claim on assets, and is equal to assets minus liabilties. Also called net assets or reisdual equity. For a noncorporate entity, owner investments and revenues increase equity whereas owner qithdrawals and expenses decrease equity.

Answer 23

Equity

Question 24

Money Unit Assumption

Answer 24

We can express transactions and events in monetary, or money, units

Question 25

Prescribes that only information with benefits of disclosure greater than the costs of providing it need be disclosed

Answer 25

Cost Benefit Constraints

Question 26

Provides guidance on when a company must recognize revenue. To recognize means to record it.

Answer 26

Revenue Recognition Principle

Question 27

Accounting

Answer 27

An information and measurement system that identifies, records, and communicates relevant,r reliable, and comparable information about an organizations business activities

Question 27

External Users

Answer 27

Use accounting information, but are not directly involved in running the organization.

Question 27

Accounts payable, notes payable, taxes payable, wages payable, creditors' claims on assets/amount company owes. Anytime you see the word payable, it is a liability

Answer 27

Examples of Liabilities

Question 27

Expenses

Answer 27

The cost necessary to earn revenues. Decrease equity.

Question 28

Cash, accounts recievable, Store Supplies, Equipment, Vehicles

Answer 28

Examples of Assets

Question 30

IASB An independent group (consisting of individuals from many countries), issues International Financial Reporting Standards that identify preferred accounting practices

Answer 30

International Accounting Standards Board

Question 31

We can express transactions and events in monetary, or money, units

Answer 31

Money Unit Assumption

Question 32

When a corporation issues only one class of stock.

Answer 32

Common (Capital) Stock

Question 34

A business'

Answer 34

Business Entity Assumption

Question 34

Revenue Recognition Principle

Answer 34

Provides guidance on when a company must recognize revenue. To recognize means to record it.

Question 35

Expanded Accounting Equation

Answer 35

Assets = Liabilities +[Owner, Capital - Owner, Withdrawals + Revenues - Expenses] [ ] = Equity

Question 37

Assumption that the business will continue operating instead of be closed or sold

Answer 37

Going-Concern Assumption

Question 38

Expense Recognition (Matching) Principle

Answer 38

Prescribes that a company record the expenses it incurred to generate the revenue reporting

Question 39

The recording of transactions and events, either manually or electronically

Answer 39

Recording/ Bookkeeping

Question 40

Materiality Constraint

Answer 40

## Footnote Only information that would influence the decisions of a reasonable person should be disclosed

Question 42

Congress passed an act to help curb financial abuses at companies that issure their stock to the public. Also call SOX

Answer 42

Sarbanes-Oxley Act

Question 43

Material, cost-benefit, conservatism, industry practices

Answer 43

Accounting Constraints

Question 43

Accounting Constraints

Answer 43

Material, cost-benefit, conservatism, industry practices

Question 44

Written promises by organizations to repay amounts loaned with interest

Answer 44

Bonds

Question 46

Often linked to net income. Stated in a ratio form as income divided by assets invested.

Answer 46

Return

Question 47

Shareholders (Stockholders)

Answer 47

Owners of a corporation

Question 48

Owner withdrawals

Answer 48

Resources such as cash that an owner takes from the compant for personal use.

Question 49

Owner's claim on assets\The assets remaining after liabilities (debts) have been paid belong to the owner A = L + Owner, Capital - Owner, Withdrawals + Revenues - Expenses

Answer 49

Equity

Question 50

Ethics

Answer 50

## Footnote Beliefs that distinguish right from wrong

Question 52

Examples of Assets

Answer 52

Cash, accounts recievable, Store Supplies, Equipment, Vehicles

Question 52

A business owned by two or more people, called partners. No special legal requirements must be met. Not legally separate from the owners. Most proprietorships and partnerships are now organized as LLCs

Answer 52

Partnership

Question 53

Sarbanes-Oxley Act

Answer 53

Congress passed an act to help curb financial abuses at companies that issure their stock to the public. Also call SOX

Question 55

The Accounting Equation

Answer 55

Assets = Liabilities + Equity

Question 56

Time Period Assumption

Answer 56

Presumes that the life of a company can be divided into time periods, such as months and years, and that useful reports can be prepared for those periods.

Question 57

Resources such as cash that an owner takes from the compant for personal use.

Answer 57

Owner withdrawals

Question 57

* Lenders (Creditors) loan money or other resources to an organization. *

Answer 57

Examples of Eternal Users

Question 58

Common (Capital) Stock

Answer 58

When a corporation issues only one class of stock.

Question 60

Identify preferred accounting practices created by IASB

Answer 60

International Financial Reporting Standards

Question 61

Creditors' claims on assets. Reflect a company's obligation to provide assets, products, or services to others. Payable refers to promises for a future outflow of resources.

Answer 61

Liabilities

Question 62

Revenues are recognized when earned. Expenses are recgonized when incurred.

Answer 62

Accrual Basis

Question 63

Owners of a corporation

Answer 63

Shareholders (Stockholders)

Question 65

GAAP

Answer 65

Generally accepted accounting principles

Question 66

Statement of cash flows

Answer 66

Identifies cash inflows (receipts) and cash outflows (payments) over a period of time.

Question 68

Occurs when expenses exceed revenues, which decrease equity

Answer 68

Net loss

Question 69

Occurs when revenues exceed expenses. Increases equity.

Answer 69

Net Income

Question 70

Sells time or services ex. accounting firm, consulting firm

Answer 70

Service Business

Question 71

External Transactions

Answer 71

Exchanges of value between two entities, which yield changes in the accounting equation

Question 73

Presumes that the life of a company can be divided into time periods, such as months and years, and that useful reports can be prepared for those periods.

Answer 73

Time Period Assumption

Question 75

A business legally separate from its owners, meaning it is responsible for its own acts and debts. Has a separate legal status which means it can conduct business with the rights, duties, and responsibilities of a person.

Answer 75

Corporation

Question 76

Dodd-Frank Wall Street Reform and Customer Protection Act

Answer 76

Congress passed an act in a desire to (1) promote accountability and transparency in the finacial system, (2) put an end to the notion of "too big to fail," (3) protect the taxpayer by ending bailouts, and (4) protect consumers from abusive financial services

Question 77

Describes a company's revenues and expenses along with the reulting net income or loss over a period of tim due to earning activities.

Answer 77

Income Statement

Question 78

Describes a company's financial position (types and amounts of assets, liabilities, and equity) at a point in time.

Answer 78

Balance Sheet

Question 79

Business Entity Assumption

Answer 79

A business'

Question 81

Equity

Answer 81

Owner's claim on assets\The assets remaining after liabilities (debts) have been paid belong to the owner A = L + Owner, Capital - Owner, Withdrawals + Revenues - Expenses

Question 82

Assets = Liabilities +[Owner, Capital - Owner, Withdrawals + Revenues - Expenses] [ ] = Equity

Answer 82

Expanded Accounting Equation

Question 83

Generally accepted accounting principles

Answer 83

GAAP

Question 85

Exchanges of value between two entities, which yield changes in the accounting equation

Answer 85

External Transactions

Question 86

Area of accounting aimed at serving external users by providing them with general-purpose financial statements

Answer 86

Financial Accounting

Question 87

Assets = Liabilities + Equity

Answer 87

The Accounting Equation

Question 88

Examples of Eternal Users

Answer 88

* Lenders (Creditors) loan money or other resources to an organization. *

Question 89

## Footnote Prescribes that a company report the details behind financial satements that would impact users' decisions.

Answer 89

Full Disclosure Principle

Question 91

Congress passed an act in a desire to (1) promote accountability and transparency in the finacial system, (2) put an end to the notion of "too big to fail," (3) protect the taxpayer by ending bailouts, and (4) protect consumers from abusive financial services

Answer 91

Dodd-Frank Wall Street Reform and Customer Protection Act

Question 92

Financial Accounting Standars Boards private sector group that sets rules and principles

Answer 92

FASB

Question 93

Liabilities

Answer 93

Creditors' claims on assets. Reflect a company's obligation to provide assets, products, or services to others. Payable refers to promises for a future outflow of resources.

Question 94

Risk

Answer 94

The uncertainty about the return we will earn.

Question 96

## Footnote Beliefs that distinguish right from wrong

Answer 96

Ethics

Question 98

Net Income

Answer 98

Occurs when revenues exceed expenses. Increases equity.

Question 100

Recording/ Bookkeeping

Answer 100

The recording of transactions and events, either manually or electronically

Question 102

Service Business

Answer 102

Sells time or services ex. accounting firm, consulting firm

Question 103

International Accounting Standards Board

Answer 103

IASB An independent group (consisting of individuals from many countries), issues International Financial Reporting Standards that identify preferred accounting practices

Question 104

Prescribes that a company record the expenses it incurred to generate the revenue reporting

Answer 104

Expense Recognition (Matching) Principle

Question 105

Balance Sheet

Answer 105

Describes a company's financial position (types and amounts of assets, liabilities, and equity) at a point in time.

Question 106

Accrual Basis

Answer 106

Revenues are recognized when earned. Expenses are recgonized when incurred.

Question 107

Partnership

Answer 107

A business owned by two or more people, called partners. No special legal requirements must be met. Not legally separate from the owners. Most proprietorships and partnerships are now organized as LLCs

Question 108

A buisness owned by one persone. No special legal requirements. Separate accounting entity but not a separate legal entity.

Answer 108

Sole Proprietorship

Question 109

Resources such as cash that an owner puts into the company and are included under the generic account Owner, Capital.

Answer 109

Owner Investments

Question 110

Financial Accounting

Answer 110

Area of accounting aimed at serving external users by providing them with general-purpose financial statements

Question 111

Use accounting information, but are not directly involved in running the organization.

Answer 111

External Users

Question 112

Sole Proprietorship

Answer 112

A buisness owned by one persone. No special legal requirements. Separate accounting entity but not a separate legal entity.