FABM 1

Question 1

A formal record that represents, in words, money or other units of measurement, certain resources, claims to such resources, transactions, or other events that result in changes to those resources and claims

Answer 1

Account

Question 2

The recording and reporting of financial transactions, including the origination of the transaction, its recognition, processing, and summarization in the FINANCIAL STATEMENTS

Answer 2

Accounting

Question 3

Accounting equation

Answer 3

Assets = Liabilities + Equity

Question 4

The amount owed to a CREDITOR for delivered goods or completed services

Answer 4

Accounts Payable

Question 5

Amounts collectible from its customers. It is the claim against a DEBTOR for an uncollected amount, generally from a completed transaction of sales or services rendered

Answer 5

Accounts receivable

Question 6

Accounting entries to account for a period changes, omissions, or other financial data required to be reported “in the books”

Answer 6

Adjusting Journal Entries

Question 7

This reflects totals after the adjusting entries are posted to the general ledger.

Answer 7

Adjusting Trial Balance

Question 8

Any resource owned or controlled by a business or an economic entity. It is anything that can be used to produce positive economic value.

Answer 8

Asset

Question 9

A document prepared to provide bookkeepers with direction and guidance concerning those entity bookkeeping requirements.

Answer 9

Accounting Manual

Question 10

This refers to the difference between the total debits and total credits recorded in an account over a specific period. This can indicate either a positive amount (surplus) or a negative amount (deficit).

Answer 10

Balance

Question 11

It reports the financial position at a point in time (end of the quarter or year).

Answer 11

Balance Sheet

Question 12

The recording of all financial transactions undertaken by a business (or an individual).

Answer 12

Bookkeeping

Question 13

A person responsible for recording and maintaining a business’ financial transactions, such as purchases, expenses, sales revenue, invoices, and payments.

Answer 13

Bookkeeper

Question 14

Any group or entity that conducts business or activities and needs to keep track of its finances.

Answer 14

Organization

Question 15

Any activity or organization where goods or services are exchanged for money with the intent to make a profit.

Answer 15

Business

Question 16

The financial resources or assets that are used to fund a business and support its operations. It represents the owner’s investment in the business and can come in different forms.

Answer 16

Capital, also known as “equity”

Question 17

The money a business or organization has on hand or in its bank accounts, is the most liquid asset, meaning it can be quickly used to pay bills, make purchases, or handle other financial transactions.

Answer 17

Cash

Question 18

A book used to record all payments made in cash such as for accounts payable, merchandise purchases, and operating expenses

Answer 18

Cash Payments Journal, also termed “cash disbursements journal”

Question 19

A book used to record all collections made in cash such as for accounts receivable, merchandise sold, and interest income.

Answer 19

Cash Receipts Journal

Question 20

A systematic listing of all accounts used by an entity.

Answer 20

Chart of Accounts

Question 21

Prepared after the financial statements have been completed.

Answer 21

Closing Entries

Question 22

A specific type of business entity that is legally separate from its owners and has distinct rights and responsibilities.

Answer 22

Corporation

Question 23

Refers to an entry that increases liabilities, equity, or revenue accounts, and decreases asset or expense accounts.

Answer 23

Credit

Question 24

Represents an increase in assets or expenses, or a decrease in liabilities, equity, or income.

Answer 24

Debit

Question 25

The process of allocating the cost of property, plant, and equipment assets to the periods that will benefit from its use.

Answer 25

Depreciation

Question 26

The earnings a company receives from its investments in the shares of other companies.

Answer 26

Dividend Income

Question 27

A portion of a company’s earnings distributed to its shareholders.

Answer 27

Dividend

Question 28

The records help ensure that all financial transactions are accurately recorded and supported, making it easier to manage and audit finances.

Answer 28

Documents

Question 29

Refers to the amount of money or assets that an owner of a business takes out from the business for personal use.

Answer 29

Drawing

Question 30

This refers to the ownership value of shareholders in a company.

Answer 30

Equity

Question 31

The outflow of assets (or increases in liabilities) due to a company’s operating activities.

Answer 31

Expenses