Exam 1 Flash Cards

Question 1

Accounting Equation

Answer 1

equation that shows a company’s resources (assets) equal
creditors’ and owners’ claims to those resources (liabilities and stockholders’ equity).

Question 2

Generally accepted accounting principles

Answer 2

the rules of financial accounting

Question 3

Assets

Answer 3

resources owned by a company

Question 4

Liabilities

Answer 4

amounts owed to creditors

Question 5

Stockholders’ Equity

Answer 5

owners’ claims to resources

Question 6

Revenues

Answer 6

the amounts earned from selling products or services to customers

Question 7

Business Transaction

Answer 7

an economic event that initiates the accounting process of recording it in the company’s accounting system

Question 7

Expenses

Answer 7

the costs of providing products and services

Question 8

Accounting Period

Answer 8

the specific time period (beginning and end) for which the accounts are aggregated, balanced, and the financial statements are prepared

Question 9

Account

Answer 9

summary of the effects of all transactions related to a particular item over a period of time

Question 10

Chart of Accounts

Answer 10

a list of all account names used to record transactions of a company

Question 11

Financial Statements

Answer 11

periodic reports published by the company for the purpose of providing information to external users

Question 12

Income Statement

Answer 12

financial statement that reports the company’s revenues and expenses over an interval of time

Question 13

Statement of Stockholders’ Equity

Answer 13

financial statement that summarizes the changes in stockholders’ equity over an interval of time

Question 14

Balance Sheet

Answer 14

financial statement that presents the financial position of the company on a particular date

Question 15

Statement of cash flows

Answer 15

financial statement that measures activities involving cash receipts and cash payments over an interval of time

Question 16

General Ledger

Answer 16

the general ledger provides, in a single collection, each account with its individual transactions and resulting account balance

Question 17

Journal

Answer 17

a chronological record of all transactions affecting a firm

Question 18

Posting

Answer 18

the process of transferring the debit and credit information from the journal to individual accounts in the general ledger

Question 19

Unadjusted Trial Balance

Answer 19

a list of all accounts and their balances before adjusting entries are completed, showing the total debits and credits

Question 20

Cash

Answer 20

liquid assets owned by the company (debit, asset, balance sheet)

Question 20

Accounts Receivable

Answer 20

amounts the company expects to collect from customers based on the delivery of service or products (debit, asset, balance sheet)

Question 21

Inventory

Answer 21

the cost of the merchandise purchased but not yet sold to customers (debit, asset, balance sheet)

Question 22

Prepaid Expenses

Answer 22

costs of assets acquired in one period that will be expensed in a future period (debit, asset, balance sheet)

Question 23

Supplies

Answer 23

the cost of supplies used in the operation of a business (debit, asset, balance sheet)

Question 24

Accounts Payable

Answer 24

promise to pay cash in the future to creditors when purchasing supplies or materials (credit, liability, balance sheet)

Question 25

Notes Payable

Answer 25

total amounts owed to creditors for loaning money to the company (credit, liability, balance sheet)

Question 26

Deferred Revenue

Answer 26

cash in advance from a customer for products or services to be provided in the future (credit, liability, balance sheet)

Question 27

Common Stock

Answer 27

amount shareholders have invested in the business. (credit, stockholders' equity, balance sheet)

Question 28

Retained Earnings

Answer 28

cumulative amount of net income earned over the life of the company that has not been distributed to stockholders as dividends (credit, stockholders' equity, balance sheet)

Question 29

Expenses

Answer 29

the costs of providing products and services. (debit, expense, income statement)

Question 29

Revenues

Answer 29

the amounts earned from selling products or services to customers (credit, revenue, income statement)

Question 30

Dividend

Answer 30

cash payments to stockholders (owners). (debit, no major category, statement of stockholders' equity)

Question 30

Net Income

Answer 30

the difference between revenues and expenses. (calculation: revenues - expense, income statement)