FABM Chapter 5 Reveiw

Question 1

What are the elements of financial statements?

Answer 1

1) Income
2) Expense
3) Liability
4) Assets
5) Equity

Question 2

These are the building blocks of financial statements

Answer 2

Elements of Financial Statements

Question 3

Two Classifications of Financial Elements

Answer 3

1) Elements of Financial Position
2) Elements of Financial Performance

Question 4

What are the Three Elements of Financial Position

Answer 4

1) Liability
2) Assets
3) Equity

Question 5

These are the elements, that are presented in the balance sheet or statement of financial _______________.

Answer 5

Elements of Financial Position

Question 6

Two Elements of Financial Performance

Answer 6

1) Income
2) Expense

Question 7

These are the elements presented in the income statement.

Answer 7

Elements of Financial Performance

Question 8

These are the elements that asseses profitability

Answer 8

Elements of Financial Performance

Question 9

Is the process of incorporating in the balance sheet or income statement an item that meets the definition of an element of financial statements?

Answer 9

Recognition

Question 10

Recognition is also called what?

Answer 10

Recording

Question 11

Is the removal of an element in the financial statement when it ceases to be an element.

Answer 11

Derecognition

Question 12

Remember that when an element is recognized, it gives rise to the recognition of another element.

Answer 12

The Duality Principle

Question 13

Makes use of a double-entry system.

Answer 13

Contemporary Accounting

Question 14

Under the double-entry system, changes in two elements are recorded every time a

Answer 14

A transaction is recorded

Question 15

Are the words of the accounting language?

Answer 15

Elements

Question 16

Is a resource controlled by the business as a result of past transactions and events and from which future economic benefits are expected to flow to the business.

Answer 16

An Asset

Question 17

How are assets recognized?

Answer 17

When it is probable in the future that “Economic Benefits” will flow to the business and the asset has a cost or value that can be measured reliably.

Question 17

Assets are resources ______ by the enterprise

Answer 17

Controlled

Question 18

Assets are resources controlled by the ______

Answer 18

Enterprise

Question 19

Assets are results of what?

Answer 19

Past Transactions or Events

Question 20

Events is short for what?

Answer 20

Past Transactions

Question 21

Assets are expected to provide what?

Answer 21

Future Economic Benefits

Question 22

Assets have _____ that can be measured reliably

Answer 22

Cost or Value

Question 23

________ are resources, tangible, or intangible, which are controlled by the ________

Answer 23

Assets, Business Enterprise

Question 24

Control over a resource is usually evidenced by what?

Answer 24

Ownership or Contractual Right

Question 25

Are properties owned by the business

Answer 25

Assets

Question 26

Means physically seen and touchable

Answer 26

Tangible

Question 27

Assets are ___ amd existing resources which are acquired by the enterprise through what?

Answer 27

Past Events

Question 28

Are resources that provide future economic benefits to the enterprise

Answer 28

Assets

Question 29

Assets can be used, consumed, or sold in the business operation to provide income or to sustain the business such as inventory, supplies, building land, machineries and equipment.

Answer 29

Utility

Question 30

The purchase of something that accrues or produces income for the enterprise is an asset.

Answer 30

Accrual or Production of income

Question 31

A property that is no usable, consumable. saleable or capable of producing income for the enterprise but is convertible to another type of asset that do so is also and asset.

Answer 31

Convertibility into another form of asset

Question 32

Is receivables an asset?

Answer 32

Yes

Question 33

When expenses are paid in advance, they will no longer be paid in the future.

Answer 33

Avoidance of future outflows of resources

Question 34

Payments for something that as no future benefit to the enterprise beyond the current accounting period are not assets but are____________

Answer 34

Expenses

Question 35

Assets have value that is _______

Answer 35

Quantifiable

Question 36

Normally, enterprises value assets at the monetary equivalent of consideration given in exchange. This is called ________

Answer 36

Acquisition cost or simply cost

Question 37

An Income Earned

Answer 37

Increase in asset and increase in income

Question 38

A liability Borrowed

Answer 38

Increase in asset and increase in liability

Question 39

An asset received in exchange for another asset

Answer 39

Increase in asset and decrease in asset

Question 40

A payment of expense

Answer 40

Decrease in asset and increase in expense

Question 41

A payment of liability

Answer 41

Decrease in asset and decrease in liability

Question 42

A returns of capital to the business owner

Answer 42

Decrease in asset and decrease in capital

Question 43

Is a present debt of the business arising from a past events, the settle meant of which is expected to result in an outflow of assets from the business

Answer 43

Liability

Question 44

A liability is a present ________

Answer 44

Obligation

Question 45

A liability recquired a future _______ of resources

Answer 45

Outflow

Question 46

Liability arises from what?

Answer 46

Past Events

Question 47

Borrowing something that isn't consumable and must be returned does not

Answer 47

Transfer ownership

Question 48

Consumables borrowed does

Answer 48

Transfer Ownership to the borrower

Question 49

It is the residual interest of the owner/owners of the enterprise in the assets of the enterprise, after deducting all its liabilities from it's assets.

Answer 49

Equity

Question 50

Is an increase in an asset or a decrease in liability that results in an increase of equity other than the contribution from owner/s of the enterprise.

Answer 50

Income

Question 51

Income is an increase in _____

Answer 51

Equity

Question 52

Income is an increase in equity resulting from:

Answer 52

Increase in asset and a decrease in liability.

Question 53

Is an increase in wealth that arises from transactions with customers or clients

Answer 53

Income

Question 54

From the sale of goods or services in the normal course of business

Answer 54

Revenue

Question 55

From secondary sources such as interest or dividends received from investments

Answer 55

Other Income

Question 56

From selling assets of the business other than goods that re normally held for sale

Answer 56

Gains

Question 57

Means income earned in the normal course of operations

Answer 57

Revenue

Question 58

From the sales of goods held for sale

Answer 58

Sales revenue or simply sales

Question 59

From sales of service

Answer 59

Service Revenue or simply fees

Question 60

Arises from the sales of goods, not usually intended to be for sale by the business.

Answer 60

Gains

Question 61

Are decrease in assets in the form of outflow or depletion of assets or recurrences of liabilities that results in decrease in equity, other than those relating to returns of capital or income to owner/s of the enterprise

Answer 61

Expense

Question 62

Are generally the cost of generating income for the business or cost of maintaining or sustaining the business; hence, they are deducted against income.

Answer 62

Expense

Question 63

Decrease in capital arising from transactions with the business owner/s are not ____ and are _____

Answer 63

Expenses, Capital Withdrawals

Question 64

A payment or an obligation to pay during the period for something that has no future economic benefits.

Answer 64

Period Expenditure

Question 65

An expiration of an asset caused by usage or passage of time

Answer 65

Depletion of Assets

Question 66

A value lost without consideration received

Answer 66

Loss

Question 67

When Assets depletes they are derecognized and are recognized as what?

Answer 67

Expenses

Question 68

Resources that decrease in value when they lose their condition in the long run and can even be destroyed is called what?

Answer 68

Depreciation of properties

Question 69

Things paid in advance will eventually expire/

Answer 69

Expiration of prepaid expenses

Question 70

Assets that are not consumable and don't depreciate or even expire.

Answer 70

Non-Expiring Assets

Question 71

Collectible from customers, clients or other parties

Answer 71

Receivables

Question 72

a liability or equity instruments of a corporation which the enterprise purchased to earn interest, dividend or appreciation in market value

Answer 72

Investments