Midterm #1

Question 1

What is financial accounting?

Answer 1

the summarizing and reporting of financial information to people outside of the organization

Question 2

Common users of financial accounting information

Answer 2

1. investors / potential investors
2. creditors / potential creditors
3. competitors
4. government (taxing/regulatory)
5. customers etc.

Question 3

What are the 4 different financial statements?

Answer 3

1. Balance Sheet
2. Income Statement
3. Statement of Stockholders Equity
4. Statement of Cash Flows

Question 4

Current Assets (List)

Answer 4

1. Cash
2. Short-Term Investments (Marketable Securities)
3. Accounts Receivable
4. Inventory
5. Prepaid Expenses

Question 5

Non-Current Assets (List)

Answer 5

1. Property, Plant, and Equipment
2. Intangible Assets
3. Long-Term Investments

Question 6

Current Liabilities (List)

Answer 6

1. Accounts Payable
2. Accrued Liabilities/Accrued Expenses
3. Unearned/Deferred Revenue
4. Short-Term Borrowings/Current Portion of Long-Term Borrowings

Question 7

Non-Current Liabilities (List)

Answer 7

1. Long-Term Borrowings - Notes Payable/Bonds Payable

Question 8

Accounts (Dr and Cr)

Answer 8

Debit Credit
Asset (up) Asset (down)
Liability (down) Liability (up)
Equity (down) Equity (up)
Revenues (down) Revenues (up)
Expenses (up) Expenses (down)
Dividends (up) Dividends (down)

Question 9

Accrued Expenses (definition)

Answer 9

Expenses incurred but not yet paid

Question 10

Accrued Revenues (definition)

Answer 10

Revenues earned but not collected/recorded