Question | Answer |
The economic transaction of the Accounting process; when money is exchanged. | Economic event |
_____ has made doing the accounting process more efficient. | Computers |
____ are individuals and organizations outside a company who want financial information about the company (investors & creditors). | External users |
___ are users within the organization that usually include management & various departments (marketing managers, production supervisors, finance directors, & company officers) | Internal users |
The accounting process is to ____ the economic transaction/event, ____ the economic event, and _____ the economic events of an organization to interested users. | identify, record, and communicate |
____ is the standard of conduct by which one's actions are judged as right or wrong, honest or dishonest. | Ethics |
Enron was setting up dummy corporations in different countries to boost their sells & they couldn't produce the work/money, so the company went down which informed the... | Sarbanes-Oxley Act |
management certify accuracy of information, serve penalties for fraudulent activity, increased independence of auditors/responsibility for board of directors;intent is to reduce unethical corporate behavior&decrease likelihood of future corporate scandal | Sarbanes-Oxley Act |
____is an effort to reduce differences between U.S. GAAP and IFRS to enhance comparability. | Convergence |
The ___ ___ ___ ____ are a common set of standards that indicate how to report economic events. | Generally Accepted Accounting Principles (GAAP) |
The Standard-Setting Bodies are: | Securities and Exchange Commission (SEC), Public Company Accounting Oversight-Board (PCAOB), Financial Accounting Standards Board (FASB), and International Accounting Standards Board (IASB) |
The ___ ___ ___ ____ (__) is the agency of the U.S. government that oversees U.S. financial markets and accounting standard-setting bodies. They’re the ones that created the SOX. | Securities and Exchange Commission (SEC) |
The ___ ___ ____ ____ ___ (__) determines auditing standards and reviews auditing firms. | Public Company Accounting Oversight Board (PCAOB) |
The ___ ___ ___ ___ (__) is the primary accounting standard-setting body in the U.S. | Financial Accounting Standards Board (FASB) |
The __ __ ___ ___ (__) issues international report standards (IFRS) that have been adopted by many outside of the U.S. They're trying to combine this & FASB because it will make it easier for investors to compare U.S. & foreign companies, & raise capital. | International Accounting Standards Board (IASB) |
The __ ___ ___ requires that the activities of the entity be kept separate and distinct from the activities of its owner and all other economic entities. | economic entity assumption |
___ ___ states that only transaction data that can be expressed in terms of money is included in the accounting record. | Monetary Unit |
__ ___ states that activities of one entity be kept separate and distinct from all others. | Economic Entity |
The 3 Business Enterprises are: | Proprietorship, Partnership, & Corporation |
___ is a business owned by one person; you're the sole owner of the business. | Proprietorship |
___ is a business owned by two or more persons associated as partners. | Partnership |
___ is business organized as a separate legal entity under state corporation law & having divided into transferable shares of stock. | Corporation |
___ just involves only the recording of the economic events aka just one part of the accounting process. | Bookkeeping |
The 2 Measurement Principles are: | Cost and Fair Value Principle |
The ___ ____ dictates that companies record assets at their cost at the time the assets were purchased. Also known as historical principle. | Cost Principle |
The __ ___ ___ indicates that assets and liabilities should be reported at fair value; is the price received to sell an asset or settle a liability. | Fair Value Principle |
____ means that financial information is capable of making a difference in a decision. | Relevance |
___means that the numbers and descriptions match what really existed or happened – it is factual | Faithful |
____ are resources owned by a business. They are used in carrying out such activities as production and sales. The common characteristic possessed by all of them is the capacity to provide future services or benefits. | Assets |
____ are claims against assets. They are existing debts and obligations. | Liabilities |
__ __ is the ownership claim on total assets; it is equal to total assets - total liabilities; consist of Common Stock and Retained Earnings (Revenues, Expenses & Dividends). | Stockholders' Equity |
__ __ is the percentage you own in the business; is the term used to describe the total amount paid in by stockholders for the shares they purchase. | Common Stock |
___ are income earned, the amount of money earned for the services you provided. | Revenues |
___ are the decreases in stockholders' equity that result from operating the business; they are the cost of assets consumed or services used in the process of earning revenue. | Expenses |
___ are the distribution of cash or other assets to stockholders. | Dividends |
There are 4 financial statements: | Income statement, Retained Earnings statement, Balance sheet, and Statement of class flow. |
An ___ ___presents the revenues and expenses and resulting net income or net loss for a specific period of time. | income statement |
A ___ ___ ___ summarizes the changes in retained earning for a specific period of time. | retained earnings statement |
A __ ___ reports the assets, liabilities, and stockholders’ equity of a business enterprise at a specific date. | balance sheet |
A __ __ __ __ summarizes information about the cash inflow (receipts) and outflows (payments) for a specific period of time. | statement of class flow |
Every account consist of this and it is the basic form of accounting; it has a Title, Left/Debit side with a Debit balance (if its the positive side), and a Right/Credit side with a Credit balance (if its the positive side). | T-Account |
An ____ is an individual accounting record of increases and decreases in a specific asset, liability, or stockholders' equity item; every one has a normal balance. | account |
___ increase assets. ___ increase liabilities. | Debits, Credits |
The Recording Process is: ____ each transaction for its effects on the accounts, ___ the transaction information in a journal (book of original entry), and ____ the journal information to the appropriate accounts in the ledger (book of accounts). | Analyze, Enter, and Transfer |
A ___ ___ ___ are entries that involve only two accounts. | simple journal entry |
A ___ ___ __ are entries that involve more than two accounts. | compound journal entry |
Most companies have a __ __ ___ that lists the accounts and the account numbers, which identity their location in the ledger. | chart of accounts |
The ___ ___ ___ (or periodicity) assumes that the economic life of a business can be divided into artificial time periods and that useful reports covering those periods can be prepared for the business. | time period assumption |
__ __ are monthly and quarterly time periods. | Interim periods |
A ___ ___ is an accounting time period that is one year in length. | fiscal year |
A ___ ___ is from January 1 to December 31 that most business use. | calendar year |
__ ___ are required each time financial statements are prepared. | Adjusting entries. |
Adjusting entries for ___ are required to record revenues earned and expenses incurred in the current period. | accruals |
Adjusting entries for ___ are required to record the portion of it that represents either the expense incurred or the revenue earned in the current accounting period. | deferrals |
Adjusting entries are made in order for ___ to be recorded in the period in which they are earned and ___ to be recognized in the period in which they occurred. | Revenues, Expenses |
Under __ __ __, transactions that change a company's financial statements are recorded in the periods in which the events occur. | accrual basis accounting |
An alternative to accrual basic accounting is ___ __ __ which is when revenues are record when cash is received and expenses are recorded when cash is paid. | cash basis accounting |
Accruals, adjusting entry will increase both a balance sheet and an income statement account, include: | accrued revenue and expenses. |
__ ___ are earned but not yet received in cash/recorded; the adjusting entry increases (debits) an asset account and increases (credits) a revenue account. | Accrued Revenues |
__ ___ are incurred but not yet paid in cash or recorded; the adjusting entry increases (debits) an expense account and increases (credits) a liability account. | Accrued Expenses |
Deferrals include: | prepaid expenses and unearned revenue |
__ __ are paid in cash and recorded as assets before they are used or consumed; the adjusting entry increases (debits) an expense account and decreases (credits) an asset account. | Prepaid Expenses |
__ __ is cash received and recorded as liabilities before revenue is earned; the adjusting entry results in a decrease (debit) to a liability account and an increase (credit) to a revenue account. | Unearned Revenues |
The __ ___ is prepared from the revenue and expense accounts. | income statement |
The ___ __ __ is derived from the retained earnings and dividends accounts and the new income (or net less) shown in the income statement. | retained earnings statement |
The __ __ is then prepared from the asset, liability, and common stock accounts from the adjusted trail balance and the ending retained earnings balance as reported in the retained earnings statement. | balance sheet |
An __ __ __ is prepared after all adjusting entries have been journalized and posted; its purpose is to prove the equality of the total debit and credit balances in the ledger after all adjustments have been made. | adjusted trail balance |
____ is the allocation of the cost on an asset to expense over its useful life in a rational and systematic manner; deals with your fixed assets; total cost - salvage value / # of years that you're supposed to use it; an estimate. | Depreciation |
Put this list in the proper order; Steps 1-6. | 1: Prepare a trial balance, 2: Make adjusting entries, 3: Prepare an adjusted trial balance, 4: Prepare the income statement, 5: Prepare the retained earnings statement, 6: Prepare the balance sheet. |
MAKE SURE TO KNOW THE PROBLEMS && THE NORMAL BALANCE FOR EACH ACCOUNT | |