Exam 1

Question 1

what are the four forms of business organization

Answer 1

sole proprietorship
partnership
corporation
limited liability company (LLC)

Question 2

what is the accounting process definition

Answer 2

accounting is the process of measuring economic activity of an entity in monetary terms and communicating the results to users

Question 3

what is the GAAP

Answer 3

Generally Accepted Accounting Principles, US Accounting Bible

Question 4

What is the FASB

Answer 4

Financial Accounting Standards Board, writes the GAAP and are the only people who can alter it

Question 5

The accounting equation

Answer 5

liabilities + stockholders’ equity = assets

Question 6

net income equation

Answer 6

revenues - expenses = net income

Question 7

what are the 5 steps of the accounting cycle

Answer 7

1. analyze
2. record
3. adjust
4. report
5. close temporary accounts

Question 8

what is it called when at least 2 accounts are affected in a transaction?

Answer 8

Double Entry Accounting

Question 9

In the recording step, what is a source document

Answer 9

Evidence of the transaction

Question 10

what is the listing of accounts called?

Answer 10

the chart of accounts

Question 11

what is the general ledger

Answer 11

running total of every transaction started

Question 12

what are the 2 types of accounting years that companies do their accounting based off of

Answer 12

calendar year
fiscal year- pick your start date

Question 13

when is revenue recognized?

Answer 13

Revenue is recognized WHEN EARNED. cash may be received at the same time, after, or before revenue is recognized. The revenue becomes recognized when the service is being done