Terms and Concepts

Question 0

Details the entities operating performance during a specific time. Subtracts expenses from revenues.

Answer 0

Income statement

Question 1

A statement of financial position. Lists the entities assets liabilities and owners equity.

Answer 1

A balance sheet

Question 2

Details the sources and uses of cash by the entity over an accounting period.

Answer 2

Statement of cash flows.

Question 3

Sets accounting standards.

Answer 3

FASB (the financial accounting standards board)

Question 4

Accounts are kept for an entity as distinct from the people who run or do business with the entity. Allows the accountant to draw a virtual boundary

Answer 4

Entity

Question 5

Financial accounting only deals with things that can be represented in monetary terms

Answer 5

Money measurement

Question 6

An entity is expected to remain in operation for the indefinite future

Answer 6

Going concern

Question 7

An entity should use the same accounting methods and procedures from period to period unless it has a sound reason to change methods

Answer 7

Consistency concept

Question 8

An entity need only apply proper accounting to items that are material. An item is material if it’s disclosure would impact the decisions of the users of the account

Answer 8

Materiality concept

Question 9

record of economic impact of each transaction rather than the cash flows

Answer 9

Accrual accounting

Question 10

Record of cash impact of each transaction

Answer 10

Cash basis accounting

Question 11

Generally accepted accounting principals Guidelines that all managers and auditors must follow while preparing and auditing accounting information for external reporting purposes

Answer 11

GAAP