Chapter 2

Question 1

With the accounting systems, if formal record of increases And decreases in a specific asset, liability, component of owners equity, revenue, or expense.

Answer 1

Account

Question 2

A list of accounts used in an entities accounting system

Answer 2

Chart of accounts

Question 3

An offset to accounts receivable for the amount of accounts receivable that are estimated to be uncollectible

Answer 3

Allowance for bad debts

Question 4

An account that offsets another account

Answer 4

Contra account

Question 5

An offset to property, plant, and equipment reflecting the amount of the cost of PPE that has been allocated to current and previous accounting period.

Answer 5

Accumulated depreciation

Question 6

An intangible asset that represents the excess of the purchase price of an acquired company over the value of the net assets acquired.

Answer 6

Goodwill

Question 7

The unsold units of product on hand

Answer 7

Inventory

Question 8

In accounting contexts, cash on hand and demand deposits held in banks and similar accounts that can be used in payment obligations

Answer 8

Cash

Question 9

Amounts customers owe the company for products that have been sold as well as amounts that may be due from suppliers.

Answer 9

Accounts receivable

Question 10

Amounts that a business owes to its vendors for goods and services that were purchased from them but which have not yet been paid

Answer 10

Accounts payable

Question 11

Revenue that has been earned but not yet billed to customers as of the end of an accounting period

Answer 11

Accrued revenue

Question 12

With reference to the cash flow statement, a format for the presentation of the statement in which cash flows from operating activities is shown as operating cash receipts less operating cash disbursements

Answer 12

Direct formant

Question 13

Generally a synonym for revenue. This is generally understood to refer to the sale of goods, where revenue is understood to include the sale of goods or services

Answer 13

Sales

Question 14

An offset to revenue reflecting any cash refunds, credits on account, and discounts from sales prices given to customers who purchased defective or unsatisfactory items.

Answer 14

Sales returns and allowances

Question 15

Assets that are expected to benefit the company over an extended period of time. Usually more than one year.

Answer 15

Non-current assets

Question 16

A financial statement that reconciles beginning of period and end of period Balance sheet values of retained income; shows the linkage between the balance sheet and the income statement

Answer 16

Statement of retained earnings

Question 17

The accounting system of recording transactions in which every recorded transaction affects at least two accounts so as to keep the basic accounting equation and balance.

Answer 17

Double entry accounting

Question 18

For a given period, equal to beginning inventory minus ending inventory plus the cost of goods acquired or produced during the period.

Answer 18

Cost of good sold

Question 19

Items of comprehensive income that are not reported on the income statement; comprehensive income minus net income

Answer 19

Other comprehensive income

Question 20

Amounts owed to the company from parties other than customers

Answer 20

Other receivables

Question 21

Very liquidy short-term investments, usually maturing in 90 days or less.

Answer 21

Cash equivalents

Question 22

Includes all changes in equity during a period except those resulting from investments by owners and distributions to owners

Answer 22

Comprehensive income

Question 23

The owners remaining claim on the company’s assets after the liabilities are deducted.

Answer 23

Residual claim

Question 24

A financial statement that provides information about a company’s profitability overstated period of time

Answer 24

Income statement

Question 25

The difference between revenue and expenses; what remains after subtracting all expenses from revenue.

Answer 25

Net income

Question 26

A balance sheet that does not show subtitles for current assets and currently liabilities.

Answer 26

Unclassified balance sheet

Question 27

A normal operating expense that has been paid in advance of when it’s due.

Answer 27

Prepaid expense

Question 28

A liability account for money that has been collected for goods or services that has not been delivered; payment received in advance of providing a good or service.

Answer 28

Unearned revenue

Question 29

A financial statement that reconciles the beginning of period and end of period balance sheet values of shareholders equity; provides information about all factors affecting shareholders equity.

Answer 29

Statement of owners equity

Question 30

A financial statement that reconciles beginning of period and end of period balance sheet values of cash; provides information about an entity cash inflows and cash outflows as they pertain to operating, investing, and financing activities.

Answer 30

Statement of cash flow’s

Question 31

With reference to cash flow statements, if format for the presentation of the statement which, in the operating cash flow section, begins with net income that shows additions and subtractions to arrive at operating cash flow

Answer 31

Indirect format

Question 32

Liabilities related to expenses that have been incurred but not yet paid as of the end of an accounting period. An example is rent payable

Answer 32

Accrued expenses