test 3

Question 1

business entity

Answer 1

assumption that a business is an accounting unit separate from its owners…

Question 2

time-period

Answer 2

assumption that the economic life of the business can be divided into time periods

Question 3

going concern

Answer 3

assumption that a business will continue into the future

Question 4

full-disclosure principle

Answer 4

financial reporting must include all significant info

Question 5

objectivity principle

Answer 5

accounts should be based on facts and not on personal opinions or feelings

Question 6

revenue recognition principle

Answer 6

revenue is recognized in the accounting period in which it is earned

Question 7

matching period

Answer 7

each cost related to revenue earned must be recorded in the same accounting period as the revenue it helped to earn

Question 8

Property

Answer 8

anything of value that is owned or controlled

Question 9

property rights

Answer 9

financial claims to property

Question 10

equity

Answer 10

financial claim to business assets

Question 11

economic event

Answer 11

business transaction

Question 12

accounts receivable

Answer 12

amounts owed by our customers to us

Question 13

accounts payable

Answer 13

amounts owed to our creditors

Question 14

on account, on credit

Answer 14

when a business uses credit to buy items

Question 15

revenue

Answer 15

money earned from seeling goods/services

Question 16

expense

Answer 16

price a business pays for goods/services

Question 17

withdrawal

Answer 17

money taken from the business by the owner

Question 18

business transaction

Answer 18

economic event that causes a change in assests, liabilities, owner’s equity

Question 19

account

Answer 19

shows balance for a specific item, record of increase/decrease of item

Question 20

basic accounting equation

Answer 20

assets=liabilities + owner’s equity

Question 21

assets

Answer 21

property or items of value owned by a business

Question 22

liabilities

Answer 22

creditor’s claims to the assets of the business

Question 23

balance sheet

Answer 23

report of the balances in all asset, liability, equity, at the end of a period

Question 24

income statement

Answer 24

states net income or net loss of the priod