Financial Accounting Exam 1 Questions And Answers Verified 100% Correct

Financial Accounting Exam 1 Questions And Answers Verified 100% Correct statement of cash flows - ANSWER reports cash receipts and cash payments classified according to the entity's major activities: operating, investing, and financing statement of retained earnings - ANSWER summary of the changes in retained earnings of a corporation during a specific period stock - ANSWER shares into which the owners' equity of a corporation is divided stockholders' equity - ANSWER the stockholders' ownership interest in the assets of a corporation account - ANSWER the record of the changes that have occurred in a particular asset, liability, or stockholders' equity during a period. the basic summary device of accounting. accrued liability - ANSWER a liability for an expense that has not yet been paid by the company chart of accounts - ANSWER list of a company's accounts and their account numbers credit - ANSWER the right side of an account debit - ANSWER the left side of an account journal - ANSWER the chronological accounting record of an entity's transactions ledger - ANSWER the book of accounts and their balances posting - ANSWER copying amounts from the journal to the ledger transaction - ANSWER any event that has a financial impact on the business and can be measured reliably trial balance - ANSWER a list of all the ledger accounts with their balances account format - ANSWER a balance sheet format that lists assets on the left and liabilities and stockholders' equity on the right accrual - ANSWER an expense or revenue that occurs before the business pays or receives cash accrual accounting - ANSWER accounting that records the impact of a business event as it occurs, regardless of whether the transaction affected cash or not accrued expense - ANSWER an expense incurred but not yet paid in cash accrued revenue - ANSWER a revenue that has been earned but not yet received in cash accumulated depreciation - ANSWER the cumulative sum of all depreciation expense from the date of acquiring a plant asset adjusted trial balance - ANSWER a list of all the ledger accounts with their adjusted balances book value - ANSWER the asset's cost minus accumulated depreciation cash-basis accounting - ANSWER accounting that records only transactions in which cash is received or paid classified balance sheet - ANSWER a balance sheet that shows current assets separate from long-term assets, and current liabilities separate from long-term liabilities closing the books - ANSWER the process of preparing the accounts to begin recording the next period's transactions. closing entries - ANSWER entries that transfer the revenue, expense, and dividends balances from the respective accounts to the retained earnings account contra account - ANSWER an account that always has a companion account whose normal balance is opposite that of the companion account current ratio - ANSWER current assets divided by current liabilities. measures a company's ability to pay current liabilities with current assets debt ratio - ANSWER ratio of total liabilities to total assets. states the proportion of a company's assets that is finalized with debt deferral - ANSWER an adjustment for which the business paid or received cash in advance. depreciation - ANSWER allocation of the cost of a plant asset to expense its useful life liquidity - ANSWER measure of how quickly an item can be converted to cash matching principle - ANSWER the basis for recording expenses. directs accountants to identify all expenses incurred during the period, to measure the expenses, and to match them against the revenues earned during the same period multi-step income statement - ANSWER an income statement that contains subtotals to highlight important relationships between revenues and expenses operating cycle - ANSWER time span during which cash is paid for goods and services that are sold to customers who pay the business in cash permanent accounts - ANSWER assets, liabilities, and stockholders' equity accounts that are not closed at the end of the period prepaid expense - ANSWER a category of miscellaneous assets that typically expire or get used up in the near future revenue principle - ANSWER the basis of recording revenues; tells accountants when to record revenue and the amount of revenue earned time-period concept - ANSWER ensures that accounting information is reported at regular intervals unearned revenue - ANSWER a liability created when a business collects cash from customers in advance to earning the revenue audit - ANSWER a periodic examination of a company's financial statements and the accounting systems, controls, and records that produce them. audits may be either external or internal. bank collections - ANSWER collection of money by the bank on behalf of a depositor bank reconciliation - ANSWER a document explaining the reasons for the difference between a depositor's records and the bank's records about the depositor's cash bank statement - ANSWER document showing the beginning and ending balances of a particular bank account listing the month's transactions that affected the account budget - ANSWER a quantitative expression of a plan that helps managers coordinate the entity's activities cash budget - ANSWER a budget that projects the entity's future cash receipts and cash disbursements