Acct 2101 Test 1, Top Questions and answers, 100% Accurate. Verified.

Acct 2101 Test 1, Top Questions and answers, 100% Accurate. Verified. Accounting is a system that ________, ________, and ___________ information that is __________, ________, ___________ to help users make better decisions.--identifies; records; communicates; relevant; reliable; comparable Objectivity Principle--Accounting information is supported by independent, unbiased evidence that is verifiable. Cost Principle--Accounting info is based on actual cost. Going–Concern Principle--Reflects assumption that the business will continue operating instead of being closed or sold. Monetary Unit Principle--Express transactions and events in monetary, or money, units. Revenue Recognition Principle--1. Recognize revenue when it is earned 2. Proceeds need not be in cash 3. Measure revenue by cash received plus cash value of items received Business Entity Principle--A business is accounted for separately from other business entities, including its owner. Net Income/Net Loss--Revenues – Expenses Income Statement––Purpose--Describes a company's revenues and expenses alone with the resulting net income or loss over a period of time due to earnings activities. Financial Statement Heading--1. Company's Name 2. The Statement Title 3. The Date or Time Period (income statement, statement of retained earnings, and statement of cash flows are prepared for a period of time; the balance sheet is prepared as of a point in time) Income Statement––Format--–Revenues reported first –Expenses reported after revenues –Net income/loss is reported at the bottom of the statement Statement of Retained Earnings––Purpose--Explains changes in retained earnings from net income (or loss) and from any dividends over a period of time. Statement of Retained Earnings––Format--Beginning retained earnings + events that increase it (net income) –events that decrease it (dividends and net loss) =ending retained earnings Beg. Ret. Earnings + Net Income – Dividends = End Ret. Earnings Balance Sheet––Purpose--Describes a company's financial position (types and amounts of assets, liabilities, and equity) at a point in time. Balance Sheet––Format--–Assets are listed on the left side –Liabilities are listed on the upper right side –Equity is listed on the bottom right side under Liabilities; Ret. Earnings is used to compute equity Statement of Cash Flows––Purpose--Identifies cash inflows (receipts) and cash outflows (payments) over a period of time. Statement of Cash Flows––Format--There are three sections: 1. Cash flows from operating activities 2. Cash flows from investing activities 3. Cash flows from financing activities –Outflows are in parentheses to denote subtraction Equation to find Ending Equity--Beg. Equity + Net Income + Stock Issuances – Dividends = Ending Equity Steps to Post a Journal Entry to a Ledger Account--1. Identify the debit acct in the ledger 2. Enter the date 3. Enter the amount and description 4. Enter the journal reference 5. Compute the balance 6. Enter the ledger acct