Chapter 1 & 2

Question 1

corporation

Answer 1

a profit making business operating as a separate legal entity and in which ownerships is divided into shares of stock.

Question 2

resources owned by a business

Answer 2

assets

Question 3

a listing of a business entity assets, liabilities, and stockholders equity as of a specific date is

Answer 3

balance sheet

Question 4

accounting equation

Answer 4

assets+ liabilities + stockholders equity

Question 5

what is included in an income statement

Answer 5

fees earned, expenses, and net income

Question 6

what is included in a retained earning statement

Answer 6

Retained earnings of previous date, net income, dividends, change in retained earnings, retained earnings currently.

Question 7

how do you find the current retained earnings?

Answer 7

the change in retained earnings plus the previous years retained earnings

Question 8

what is in a balance sheet

Answer 8

assets,liabilities, and stockholders equity

Question 9

what is considered an asset

Answer 9

cash, accounts receivable, supplies, land,

Question 10

what is considered a liability

Answer 10

accounts payable

Question 11

what is considered stockholders equity

Answer 11

common stock, retained earnings, expenses, fees earned, dividends

Question 12

what is on a statement of cash flows

Answer 12

cash flows from operating activities, cash flows used for investing activities, and cash flows from financing activities, net increase in cash , cash as of previous year, and cash as of current year

Question 13

three types of businesses are

Answer 13

service, merchandising, and manufacturing businesses

Question 14

forms of business entities

Answer 14

partnership,proprietorship, corporation, and limited liability company

Question 15

How do you find net income?

Answer 15

subtract fees earned from total expenses

Question 16

How do you find retained earnings?

Answer 16

previous year retained earnings from change in retained earnings , which is net income minus dividends

Question 17

What side is credit and debit on a T chart?

Answer 17

debit is on the left and credit is on the right

Question 18

What is a credit?

Answer 18

stockholders equity, liabilities, and revenues

Question 19

what is a debit

Answer 19

dividends, assets, and expenses

Question 20

the debit should only increase for a ______

Answer 20

asset

Question 21

a debit may signify an

Answer 21

increase in an asset account

Question 22

the type of account with a normal credit balance is

Answer 22

revenue

Question 23

a debit balance in which of the following accounts would indicate a likely error

Answer 23

fees earned

Question 24

the receipt of cash from customers in payment of their accounts would be recorded by

Answer 24

a debit to cash and a credit to accounts receivable

Question 25

the form listing the titles and balances of the accounts in the ledger on a given date is the

Answer 25

trial balance

Question 26

when a credit increases a debit

Answer 26

decreases

Question 27

Assets are
liabilities are
owners equity

Answer 27

• what the business owns
• what they owe
• what is left over

Question 28

object of accounting is to

Answer 28

provide relevant, reliable and timely info

Question 29

generally accepted accounting principles

Answer 29

rules, standards to prepare accounting info, want info to follow the object of accounting

Question 30

financial accounting standards board

Answer 30

does research to make changes, we follow this

Question 31

SEC

Answer 31

government oversees exchanges that public companies make

Question 32

IASB

Answer 32

Oversees accounting for global business exchanges

Question 33

mcdonalds is an example of

Answer 33

GAAP and IASB

Question 34

monetary unit

Answer 34

everything in one monetary term- ex dollars in US

Question 35

Time period

Answer 35

to compare later on different periods

Question 36

Business entity

Answer 36

business transaction association with business entity- ex pepsi

Question 37

going concern

Answer 37

assume it all last forever

Question 38

four principles

Answer 38

• measurement- objective and verifiable
• historical cost-record cost (a house, what you actually paid for it)
• revenue recogntion- when they are earned ( after you completed your task)
• expense recognition- when they are used ( not when paid for)

Question 39

international vs GAAP

Answer 39

International- periodic evaluation, and GAAP-doesnt

Question 40

transaction

Answer 40

transactions day to day in businesses has to be measurable and evidence

Question 41

operating, investing, financing

Answer 41

• operating- you want cash to come from this-day to day operations
• investing-long term assets
• financing- equity and long term debt, dividends is an example because you are paying off debt

Question 42

unearned revenues is an

Answer 42

liability

Question 43

prepaid expenses is an

Answer 43

asset

Question 44

rules in accounting

Answer 44

accounting equation must always balance, every transaction affect two or more accounts, debits=credits

Question 45

when a question says “ paid creditor on account” … this means

Answer 45

account payable

cash

Question 46

when a question says “ purchased … on account “…. this means

Answer 46

Food

account payable