David Haddock/John Price, College Accounting
Chapters 1 - 30, 17th Edition TEST BANK,
Corporation - ANSWER: a business owned by stockholders (or shareholders)
Merchandising Business - ANSWER: a business that buys a product from another
business to sell to customers
Fiscal year - ANSWER: Accounting period of 12 months
Processing - ANSWER: recognizing the effect of transactions on the assets, liabilities,
owner's equity, revenues, and expenses of a business
Income statement - ANSWER: financial statement that reports the profitability of
business operations for a specific period of time
Balance Sheet - ANSWER: financial statement that reports a firm's assets, liabilities,
and owner's equity on a specific date
Footings - ANSWER: the total dollar amounts on the debit and credit sides of an
account
Double-entry accounting - ANSWER: A system in which each transaction has a dual
effect on the accounting elements
Balance - ANSWER: The difference between the footings of an account
Chart of accounts - ANSWER: a list of all accounts used by a business
Accrual Basis of accounting - ANSWER: a method of accounting under which
revenues are recorded when earned and expenses are recorded when incurred
Depreciable cost - ANSWER: the cost of an asset that is subject to depreciation
Depreciation - ANSWER: a method of matching an asset's original cost against the
revenues produced over its useful life
Historical cost principle - ANSWER: a principle that requires assets to be recorded at
their actual cost
Matching principle - ANSWER: a principle that requires the matching of revenues
earned during an accounting period with the expenses incurred to produce the
revenues
, Useful life - ANSWER: the period of time that an asset is expected to help produce
revenues
Post-closing trial balance - ANSWER: prepared after posting the closing entries to
prove the equality of the debit and credit balances in the general ledger accounts
Controlling account - ANSWER: A summary account maintained in the general ledger
with a subsidiary ledger
Credit memo - ANSWER: A document issued when credit is given for merchandise
returned or for an allowance
Sales Return - ANSWER: merchandise returned by a customer for a refund
Sales Ticket - ANSWER: A document created as evidence of a sale in a retail business
Schedule of accounts Receivable - ANSWER: An alphabetical or numerical listing of
customer accounts and balances, usually prepared at the end of the month
Bank reconciliation - ANSWER: A report used to bring the book and bank balances
into agreement
Bank statement - ANSWER: A statement of account issued by a bank to each
depositor once a month
Deposit Ticket - ANSWER: A form showing a detailed listing of items being deposited
Deposits in transit - ANSWER: Deposits that have not reached or been recorded by
the bank before the bank statement is prepared
Drawee - ANSWER: The bank on which the check is drawn
Electronic Funds Transfer (EFT) - ANSWER: A process using a computer rather than
paper checks to complete transactions with the bank
Endorsement - ANSWER: Stamping or writing the depositor's name and sometimes
other information on the back of the check
Not Sufficient Funds (NSF) Check - ANSWER: A check deposited by the depositor that
is not paid because the drawer did not have sufficient funds
Petty cash fund - ANSWER: A fund established to pay for small items with cash
What are the Five steps of the accounting process in order? - ANSWER: 1. Analyzing
2. Recording
3. Classifying
Chapters 1 - 30, 17th Edition TEST BANK,
Corporation - ANSWER: a business owned by stockholders (or shareholders)
Merchandising Business - ANSWER: a business that buys a product from another
business to sell to customers
Fiscal year - ANSWER: Accounting period of 12 months
Processing - ANSWER: recognizing the effect of transactions on the assets, liabilities,
owner's equity, revenues, and expenses of a business
Income statement - ANSWER: financial statement that reports the profitability of
business operations for a specific period of time
Balance Sheet - ANSWER: financial statement that reports a firm's assets, liabilities,
and owner's equity on a specific date
Footings - ANSWER: the total dollar amounts on the debit and credit sides of an
account
Double-entry accounting - ANSWER: A system in which each transaction has a dual
effect on the accounting elements
Balance - ANSWER: The difference between the footings of an account
Chart of accounts - ANSWER: a list of all accounts used by a business
Accrual Basis of accounting - ANSWER: a method of accounting under which
revenues are recorded when earned and expenses are recorded when incurred
Depreciable cost - ANSWER: the cost of an asset that is subject to depreciation
Depreciation - ANSWER: a method of matching an asset's original cost against the
revenues produced over its useful life
Historical cost principle - ANSWER: a principle that requires assets to be recorded at
their actual cost
Matching principle - ANSWER: a principle that requires the matching of revenues
earned during an accounting period with the expenses incurred to produce the
revenues
, Useful life - ANSWER: the period of time that an asset is expected to help produce
revenues
Post-closing trial balance - ANSWER: prepared after posting the closing entries to
prove the equality of the debit and credit balances in the general ledger accounts
Controlling account - ANSWER: A summary account maintained in the general ledger
with a subsidiary ledger
Credit memo - ANSWER: A document issued when credit is given for merchandise
returned or for an allowance
Sales Return - ANSWER: merchandise returned by a customer for a refund
Sales Ticket - ANSWER: A document created as evidence of a sale in a retail business
Schedule of accounts Receivable - ANSWER: An alphabetical or numerical listing of
customer accounts and balances, usually prepared at the end of the month
Bank reconciliation - ANSWER: A report used to bring the book and bank balances
into agreement
Bank statement - ANSWER: A statement of account issued by a bank to each
depositor once a month
Deposit Ticket - ANSWER: A form showing a detailed listing of items being deposited
Deposits in transit - ANSWER: Deposits that have not reached or been recorded by
the bank before the bank statement is prepared
Drawee - ANSWER: The bank on which the check is drawn
Electronic Funds Transfer (EFT) - ANSWER: A process using a computer rather than
paper checks to complete transactions with the bank
Endorsement - ANSWER: Stamping or writing the depositor's name and sometimes
other information on the back of the check
Not Sufficient Funds (NSF) Check - ANSWER: A check deposited by the depositor that
is not paid because the drawer did not have sufficient funds
Petty cash fund - ANSWER: A fund established to pay for small items with cash
What are the Five steps of the accounting process in order? - ANSWER: 1. Analyzing
2. Recording
3. Classifying
