Principles Of Accounting 1 (Exam 1)
Accounting - ANS-An information system that provides reports to stakeholders about
the economic activities and condition of a business.
Business Entity Concept - ANS-A concept of accounting that limits the economic data in
the accounting system to data related directly to the activities of the business.
generally accepted accounting principles (GAAP) - ANS-Generally accepted guidelines
for the preparation of financial statements. (In the USA)
Financial Accounting Standards Board (FASB) - ANS-The authoritative body that has
the primary responsibility for developing accounting principles. (Sets the rules for
GAAP)
Securities and Exchange Commission (SEC) - ANS-An agency of the U.S. government
that has authority over the accounting and financial disclosures for companies whose
shares of ownership (stock) are traded and sold to the public.
International Accounting Standards Board (IASB) - ANS-An organization that issues
International Financial Reporting Standards for many countries outside the United
States.
International Financial Reporting Standards (IFRS) - ANS-Emerged to reduce
cross-country differences in accounting standards, primarily in countries outside of
North America.
Matching Concept - ANS-A concept of accounting in which expenses are matched with
the revenue generated during a period by those expenses.
Cost Concept - ANS-A concept of accounting that determines the amount initially
entered into the accounting records for purchases.
Forms of Business Entities - ANS-Proprietorship, Partnership, Corporation, and Limited
Liability Company
Revenue Recognition Concept - ANS-The accounting concept that supports reporting
revenues when the services are provided to customers.
, Accounting Equation - ANS-Assets= Liabilities + Owner's Equity
Assets - ANS-The resources owned by a business.
Liabilities - ANS-The rights of creditors that represent debts of the business.
Owner's Equity - ANS-The owner's right to the assets of the business.
Expenses - ANS-Assets used up or services consumed in the process of generating
revenues.
Revenues - ANS-Increases in assets and owner's equity as a result of selling services
or products to customers
Net Income - ANS-The amount by which revenues exceed expenses.
Net Loss - ANS-The amount by which expenses exceed revenues.
Income Statement - ANS-A summary of the revenue and expenses for a specific period
of time, such as a month or a year.
Statement of Owner's Equity - ANS-A summary of the changes in owner's equity that
have occurred during a specific period of time, such as a month or a year.
Balance Sheet - ANS-A list of the assets, liabilities, and owner's equity as of a specific
date, usually at the close of the last day of a month or a year.
Cash Flow Statement - ANS-A summary of the cash receipts and cash payments for a
specific period of time, such as a month or a year.
Debit - ANS-Amount entered on the left side of an account.
Credit - ANS-Amount entered on the right side of an account.
T-Accounts - ANS-The simplest form of an account.
Journalizing - ANS-The process of recording a transaction in the journal.
Journal Entries - ANS-The form of recording a transaction in a journal.
Accounting - ANS-An information system that provides reports to stakeholders about
the economic activities and condition of a business.
Business Entity Concept - ANS-A concept of accounting that limits the economic data in
the accounting system to data related directly to the activities of the business.
generally accepted accounting principles (GAAP) - ANS-Generally accepted guidelines
for the preparation of financial statements. (In the USA)
Financial Accounting Standards Board (FASB) - ANS-The authoritative body that has
the primary responsibility for developing accounting principles. (Sets the rules for
GAAP)
Securities and Exchange Commission (SEC) - ANS-An agency of the U.S. government
that has authority over the accounting and financial disclosures for companies whose
shares of ownership (stock) are traded and sold to the public.
International Accounting Standards Board (IASB) - ANS-An organization that issues
International Financial Reporting Standards for many countries outside the United
States.
International Financial Reporting Standards (IFRS) - ANS-Emerged to reduce
cross-country differences in accounting standards, primarily in countries outside of
North America.
Matching Concept - ANS-A concept of accounting in which expenses are matched with
the revenue generated during a period by those expenses.
Cost Concept - ANS-A concept of accounting that determines the amount initially
entered into the accounting records for purchases.
Forms of Business Entities - ANS-Proprietorship, Partnership, Corporation, and Limited
Liability Company
Revenue Recognition Concept - ANS-The accounting concept that supports reporting
revenues when the services are provided to customers.
, Accounting Equation - ANS-Assets= Liabilities + Owner's Equity
Assets - ANS-The resources owned by a business.
Liabilities - ANS-The rights of creditors that represent debts of the business.
Owner's Equity - ANS-The owner's right to the assets of the business.
Expenses - ANS-Assets used up or services consumed in the process of generating
revenues.
Revenues - ANS-Increases in assets and owner's equity as a result of selling services
or products to customers
Net Income - ANS-The amount by which revenues exceed expenses.
Net Loss - ANS-The amount by which expenses exceed revenues.
Income Statement - ANS-A summary of the revenue and expenses for a specific period
of time, such as a month or a year.
Statement of Owner's Equity - ANS-A summary of the changes in owner's equity that
have occurred during a specific period of time, such as a month or a year.
Balance Sheet - ANS-A list of the assets, liabilities, and owner's equity as of a specific
date, usually at the close of the last day of a month or a year.
Cash Flow Statement - ANS-A summary of the cash receipts and cash payments for a
specific period of time, such as a month or a year.
Debit - ANS-Amount entered on the left side of an account.
Credit - ANS-Amount entered on the right side of an account.
T-Accounts - ANS-The simplest form of an account.
Journalizing - ANS-The process of recording a transaction in the journal.
Journal Entries - ANS-The form of recording a transaction in a journal.
