Brainscape's Knowledge GenomeTM


Top Flashcards (Certified)
All Flashcards

Accounting Principles 1 > Chapter 1 > Flashcards

Chapter 1 Flashcards

1
Q

What is the Account formula

A

A= L+Eq or A-L= Eg
Assets equals liabilities plus Equity or Assets minus Liabilities equals Equity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What’s does IFRS stand for ?

A

International financial reporting standards

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What does IASB stand for?

A

International Accounting Standards Board

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What does SEC stand for?

A

Securities and Exchange Commission

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What does FASB stand for?

A

Financial accounting standard board

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What does GAAP stand for ?

A

Generally accepted accounting principles

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What is the definition of GAAP

A

Concepts and rules that govern accounting

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What are External Users

A

Accounting information do not directly run the company and limited access to its accounting information
Example: lenders, shareholders,voters suppliers

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What are Internal Users ?

A

Accounting information directly manage the company
Example: purchasing managers,HR managers, CEO

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What is Accounting?

A

It is information and measurement system that identifies,records,and communicates a company’s business activities.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What is Recordkeeping/Bookkeeping?

A

It is a recording of all transactions and events.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What is the difference between financial accounting and managerial accounting?

A

Financial accounting focuses on the needs of external users . Managerial accounting focuses on the needs of internal users.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What is the Fraud triangle?

A

It’s the three factors that pushes someone to commit fraud .

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What are the three factors in the Fraud Triangle?

A

Opportunity, Pressure , Rationalization.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What are Internal controls ?

A

Procedures to protect assets, ensure reliable accounting, promote efficiency and uphold company policies.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What are Auditors?

A

People that verify the effectiveness of internal control

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What are Ethics in accounting?

A

Beliefs that separate right from wrong .

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

What is the Conceptual framework for the FASB and their definitions

A

•Objectives -provide information useful to investors
•Qualitative characteristics -require info that has relevance and faithful representation
•Elements -define items
•Recognition and measurement -set criteria for a item to be recognized

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

What are the four general principles?

A

•Measurement principle (cost principle)
•Revenue recognition principle
•Expense recognition principle (matching principle)
•Full disclosure principle

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Define Measurement Principle

A

Accounting information is based on actual cost.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Define Revenue recognition principle

A

Revenue is recognized (1) when goods and services are provided to customers (2) the amount expected to be received from customer .

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Define Expense Recognition principle

A

A company record the expenses it incurred to generate the revenue reported.

23
Q

Define Full disclosure principle

A

A company reports the details behind financial statements that would impact users’ decisions.

24
Q

What are the four Accounting Assumptions?

A

•Going-concern assumption
• Monetary unit assumption
•Time period assumption
•Business Entity assumption

25
Define Going-concern assumption
Information assumes that the business will continue to operate instead of being closed or sold
26
Define Monetary Unit assumption
Transactions and events are expressed in monetary or money units Ex: U.S dollar and Mexican peso
27
Define Time period assumption
The life of the company can be divided into time periods and useful reports can be prepared for those periods. Ex months , years
28
Define Business entity assumption
A business is accounted for separately from other business entities and its owner(s).
29
What are the 4 common business entities?
• sole proprietorship •partnership •corporation •Limited Liability Company (LLC)
30
What is a sole proprietorship and its Attributes?
• one owner , easy setup • no additional business income tax •unlimited liability (owner is personally responsible for the company’s debts) • not a separate legal entity •Business ends with owner’s death or choice.
31
What is a Partnership and its attributes?
• two or more called partners, easy set up • no additional business income tax •unlimited liability (partners are jointly responsible for the company’s debts) • not a separate legal entity •Business ends with owner’s death or choice.
32
What is a Corporation and its Attributes?
•1 or more called shareholders;can get many investors by selling stocks or shares of corporate ownership •additional corporate income tax. •Limited liability. Owners are not liable for corporate acts and debts • separate entity with same rights and responsibilities as a person •indefinite
33
Define Limited Liability Company and its attributes
•1or more called members • no additional income tax • Limited liability, owners are not personally liable for LLC debts • separate entity with same rights and responsibilities as a person • indefinite
34
What is Cost-Benefit constraint/ cost constraint?
Information disclosed by an entity must have benefits to the user that are greater than the costs of providing it
35
What are Assets?
Resources a company owns or controls
36
What are Liabilities?
A creditor’s claim on assets
37
What is Equity?
The owner’s claim on assets and is equal to assets minus liabilities.
38
What is the Expanded Accounting Equation?
Assets= liabilities +Contributed Capture + retained earnings or Assets = liabilities + common stock-dividends +revenue-expenses
39
What is Common stock?
Reflects inflow of cash or other net assets from shareholders in exchange for stock.
40
What is Dividends ?
Outflow of cash and other assets to shareholders that reduces equity
41
What is Revenue?
Increase equity from sales of products and services to customers Ex: sales of products, services provided, rented facilities, and commissions from services.
42
What is Expenses?
Decrease in equity from cost of providing products and services to customers Ex: cost of employees time , use of supplies, advertising,utilities,insurance fees.
43
What are External transactions?
Exchanges of value between two entities
44
What is Internal transactions?
Exchanges within an entity which may or may not affect the accounting equation.
45
What are Events?
Happenings that affect the accounting equation and are reliably measured
46
What are the four Financial Statements?
• Income Statement • Statement of retained earnings • Balance Sheet •Statement of cash flows
47
What is the purpose of the Income statement?
Describes a company’s revenues and expenses and computes net income or loss over a period of time Ex: Revenues - expenses = net income
48
What is the purpose of a Statement of retained earnings?
Explains changes in retained earnings from net income/loss and any dividends over a period of time Ex: Beg. Retained earnings +net income- dividends = End . Retained earnings
49
What is the purpose of a Balance Sheet?
Describes a company’s financial position (types and amounts of assets,liabilities, and equity) at a point in time Ex: accounting equation
50
What is the purpose of Statement of cash flows ?
Identifies cash flows (receipts) and cash outflows ( payments) over a period of time ex: +/- operating C.F +/- Investing C.F +/- Financing C.F __________________ Change in cash ( C.F= cash flow)
51
What is Net income?
Occurs when revenue exceeds expenses
52
What is Net Loss?
Occurs when expenses exceed revenues
53
What’s is the Return of Assets( ROA) and the equation?
Helps evaluate if management is effectively using assets to generate net income. Net income Return on assets = ————————— Average total assets
54
what is a Summary of transactions?
Financial effects of the transactions using the expanded accounting equation.

Accounting Principles 1 (2 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions