Mid Term Review Slides

Question 1

Accurate, timely __________ ___________ is a necessary element to making good business decisions.

Answer 1

financial information

Question 2

Decision makers must be able to understand how “the numbers” reflect their operations will reflect their ______, and in what way their _______ will affect “the numbers”.

Answer 2

operations, decisions

Question 3

What is accounting?

Answer 3

Accounting identifies economic events, records the transactions, then communicates the results.

Question 4

Who uses financial accounting data?

Answer 4

Internal users: managers and owners. External users: Creditors, vendors, bankers, government agencies, customers, outside investors, shareholders, stockholders.

Question 5

What is monetary unit?

Answer 5

Means we account for things only that can be measured in dollars.

Question 6

What is economic entity?

Answer 6

Means we keep accounting records for a company, a division of a company, separate from the owners and separate from other companies.

Question 7

What is the cost principle?

Answer 7

Means we record things at actual cost at the actual time of the transaction.

Question 8

Materiality

Answer 8

Means if a particular number is small compared to other numbers, don’t spend too much time on it.

Question 9

Owner’s equity is what is left over from ___________ minus ____________ and what belongs to the owner.

Answer 9

assets, liabilities

Question 10

In all transactions, something is given, something is received, they have ______ value.

Answer 10

equal

Question 11

What are the basic financial statements?

Answer 11

Balance sheet, income statement, changes of owner’s equity, cash flow.

Question 12

Each financial statement provides information _______ in other statements.

Answer 12

not seen

Question 13

What is a balance sheet?

Answer 13

A snapshot for a moment of time of assets = liabilities and owner’s equity.

Question 14

What is an income statement?

Answer 14

The sales and revenue for a period of time, less costs and expenses for that period of time. This information provides profits. Profits and losses increase or decrease owner’s equity.

Question 15

What is a statement of owner’s equity?

Answer 15

The beginning balance for a period of time plus everything in less everything out. The result provides the ending balance.

Question 16

What is the cash flow statement?

Answer 16

The beginning balance in cash, plus all cash in and from what source, less cash out and to what destination. For a time period.

Question 17

What are the five major categories of accounts?

Answer 17

Assets, liabilities, owner’s equity, revenues and expenses.

Question 18

Which accounts have normal debit balances?

Answer 18

Assets and expenses

Question 19

Which accounts have normal credit balances?

Answer 19

Liabilities, owner’s equity and revenue

Question 20

If the normal balance is a debit, then _______ to that account will increase the balance, _______ will reduce the balance.

Answer 20

debits, credits

Question 21

If the normal balance is a credit, than ________ to that account will increase the balance, __________ will reduce the balance.

Answer 21

credits, debits

Question 22

Transactions are recorded in __________ order in the journal.

Answer 22

chronological

Question 23

At the end of the period, entries in the journal are _______ to the ledger.

Answer 23

posted

Question 24

What is the Chart of Accounts?

Answer 24

A list of accounts in a company, some for assets, some for liabilities, some for owner’s equity.

Question 25

The __________ is the list of all accounts in the ledger showing the ending balance of each account, and if that balance is a debit or a credit

Answer 25

trial balance

Question 26

Unearned or deferred revenue is a(n) ____________. When a business provides a service with an agreement to be paid at a later date, that is falls under an account receivable and is a(n) __________.

Answer 26

liability, asset

Question 27

What are the typical accounts that need adjustments?

Answer 27

prepaid insurance, supplies, fixed assets/depreciation, accrued interest, accrued payroll, unearned revenue, inventory

Question 28

What are the primary goals of internal control?

Answer 28

1.) protect assets 2.) assure numbers are accurate 3.) assure laws are followed