Financial Accounting Exam 1
Questions And Answers11
operating budget - ANSWERSa budget of future net income. projects a company's future
revenue and expenses.
accounts payable - ANSWERSa liability backed by the general reputation and credit standing of
the debtor
accounting - ANSWERSthe information system that measures business activities, processes that
information into reports and financial statements, and communicates the results to decision
makers
accounting equation - ANSWERSAssets= Liabilities + Owners' Equity
asset - ANSWERSan economic resource that is expected to be a benefit in the future
balance sheet - ANSWERSlist of an entity's assets, liabilities, and owners' equity as of a specific
date
board of directors - ANSWERSgroup elected by the stockholders to set a policy for a corporation
and to appoint its officers
cash - ANSWERSmoney and any medium of exchange that a bank accepts at face value
, corporation - ANSWERSa business owned by stockholders. a corporation is a legal entity, an
"artificial person" in the eyes of the law
current asset - ANSWERSan asset that is expected to converted into cash, sold, or consumed
during the next 12 months, or within the business's normal operating cycle if longer than a year
current liability - ANSWERSa debt due to be paid within one year or within the entity's operating
cycle
deficit - ANSWERSnegative balance in retained earnings caused by net loss over a period of a
year
dividends - ANSWERSdistributions by a corporation to its stockholders
entity - ANSWERSan organization or a section of an organization that, for accounting purposes,
stands apart from other organizations and individuals as a separate economic unit
ethics - ANSWERSstandards of right and wrong that transcend economic and legal boundaries.
ethical standards that deal with the way we treat others and restrain our own actions because
of the desire, expectations, or rights of others, or with our obligations to them
expenses - ANSWERSdecrease in retained earnings that results from operations; the cost of
doing business; opposite of revenues
fair value - ANSWERSthe amount that a business could sell an asset for, or the amount that a
business could pay to settle a liability
financial accounting - ANSWERSthe branch of accounting that provides information to people
outside of the firm
Questions And Answers11
operating budget - ANSWERSa budget of future net income. projects a company's future
revenue and expenses.
accounts payable - ANSWERSa liability backed by the general reputation and credit standing of
the debtor
accounting - ANSWERSthe information system that measures business activities, processes that
information into reports and financial statements, and communicates the results to decision
makers
accounting equation - ANSWERSAssets= Liabilities + Owners' Equity
asset - ANSWERSan economic resource that is expected to be a benefit in the future
balance sheet - ANSWERSlist of an entity's assets, liabilities, and owners' equity as of a specific
date
board of directors - ANSWERSgroup elected by the stockholders to set a policy for a corporation
and to appoint its officers
cash - ANSWERSmoney and any medium of exchange that a bank accepts at face value
, corporation - ANSWERSa business owned by stockholders. a corporation is a legal entity, an
"artificial person" in the eyes of the law
current asset - ANSWERSan asset that is expected to converted into cash, sold, or consumed
during the next 12 months, or within the business's normal operating cycle if longer than a year
current liability - ANSWERSa debt due to be paid within one year or within the entity's operating
cycle
deficit - ANSWERSnegative balance in retained earnings caused by net loss over a period of a
year
dividends - ANSWERSdistributions by a corporation to its stockholders
entity - ANSWERSan organization or a section of an organization that, for accounting purposes,
stands apart from other organizations and individuals as a separate economic unit
ethics - ANSWERSstandards of right and wrong that transcend economic and legal boundaries.
ethical standards that deal with the way we treat others and restrain our own actions because
of the desire, expectations, or rights of others, or with our obligations to them
expenses - ANSWERSdecrease in retained earnings that results from operations; the cost of
doing business; opposite of revenues
fair value - ANSWERSthe amount that a business could sell an asset for, or the amount that a
business could pay to settle a liability
financial accounting - ANSWERSthe branch of accounting that provides information to people
outside of the firm
