Welcome to the world of Accounting

Question 1

A financial relationship at the heart of the accounting model: Assets = Liabilities + Owners’ Equity

Answer 1

Accounting equation

Question 2

The economic resources owned by an entity; entailing probable future benefits to the entity

Answer 2

Assets

Question 3

The examination of transactions and systems that underlie an organization’s financial statements with the goal or reporting thereon

Answer 3

Auditing

Question 4

A financial statement that presents a firm’s assets, liabilities, and owners’ equity at a particular point in time

Answer 4

Balance sheet

Question 5

A form of business organization where ownership is represented by divisible units called shares of stock

Answer 5

Corporation

Question 6

Amounts paid from profits of a corporation to shareholders as a return on their investment in the stock of the entity

Answer 6

Dividends

Question 7

The costs incurred in producing revenues

Answer 7

Expenses

Question 8

An organization charged with producing standards for financial reporting in the USA

Answer 8

Financial accounting standards board

Question 9

An area of accounting that deals with external reporting to parties outside the firm; usually based on standardized rules and procedures

Answer 9

Financial accounting

Question 10

Core financial reports that are prepared to represent the financial position and results of operations of a company

Answer 10

Financial statements

Question 11

The concept that many transactions and events are to be measured and reported at acquisition cost

Answer 11

historical cost principle

Question 12

A financial statement that summarizes the revenues, expenses, and results of operations for a specified period of time

Answer 12

income statement

Question 13

Amounts owed by an entity to others

Answer 13

liabilities

Question 14

An area of accounting concerned with reporting results to managers and others who are internal to an organization

Answer 14

managerial accounting

Question 15

The excess of revenues over expenses for a designated period of time

Answer 15

net income

Question 16

The residual of assets minus liabilities, representing the collective interest or position of the entity’s owners

Answer 16

owner’s equity

Question 17

Resources provided to an organization by a person in exchange for a position of ownership in the organization

Answer 17

owner’s investment

Question 18

The excess of a corporation’s income over its dividends

Answer 18

retained earnings

Question 19

Inflows and other benefits received in exchange for the providing of goods and services

Answer 19

revenues

Question 20

A financial statement that discloses changes in retained earnings during a designated period of time; those changes usually attributable to income and dividends

Answer 20

statement of retained earnings