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Accounting Test 1
Chapter 1
| Question | Answer |
|---|---|
| a liability backed by the general reputation and credit standing of the debtor | account payable |
| the information system that measures business activities, processes that information into reports and financial statements, and communicates the results to decision makers. | accounting |
| the most basic tool of accounting: assets = liabilities + owners' equity | accounting equation |
| an economic resource that is expected to be of benefit in the future | asset |
| list of an entity's assets, liabilities, and owners' equity as of a specific date. Also called the statement of financial position. | balance sheet |
| group elected by the stockholders to set policy for a corporation and to appoint its officers | board of directors |
| another anme for the owners equity of a business | capital |
| money and any medium of exchange that a bank accepts at face value | cash |
| the most basic form of capital stock | common stock |
| a business owned by stockholdewrs. A legal entity, an "artificial person" in the eyes of the law | corporation |
| an asset that is expected to be converted to cash, sold, or consumed during the next 12 months, or within the business's normal operating cycle if the cycle is longer than a year | current asset |
| a deb due to be paid within one year or within the entity's operating cycle if the cycle is longer than a year | current liability |
| negative balance in retained earning cause by net losses over a period of years | deficit |
| distributions (usually cash) by a corporation to its stockholders. | dividends |
| and organization or a section of an organization that, for accounting purposes, stands apart from other organizations and individuals as a separate economic unit | entity |
| standards of right and wrong that transcend economic and legal boundaries. | ethics |
| decrease in retained earnings that results from operations; the cost of doing business; opposite revenues | expenses |
| the amount that a business could sell an asset for, or the amounth that a business could pay to settle a liability | fair value |
| the branch of accounting that provides information to people outside the firm | financial accounting |
| activities that obtain form investors and creditors the cash needed to launch and sustain the busines; a section of the statement of cash flows. | financing activities |
| another name for property, plant, and equipment | fixed assets |
| accounting guidelines, formulated by the Financail Accounting Standards Board, that govern how accounting is practiced. | Generally accepted accounting principles (GAAP) |
| HOld that the entity will remain in operation for the foreseeable future | going-concern assumption |
| principle that state that asset and services should be recorded at their actual cost | historical cost principle |
| a financial statement listing an entity's revenues, expenses, and net income or net loss for a specific period. also called statement of operations | income statement |
| accouting guidelins, formulated by the international accounting standards board. By 2014, US GAAP is expected to be harmonized with this | International Financial Reporting Standards (IFRS) |
| Activities that increase or decrease the long term assets available to the business; a section of the statement of cash flows | investing activities |
| an economic obligation (a debt) payable to an individual or an organization outside of the business | liability |
| a business organization in which the business (not the owner) is liable for the company's debt | limited liability company |
| a liability that falls due beyond one year from the date of the financial statements | long term debt |
| the branch of accounting that generates information for the internal decision makers of a business, such as top executives | management accounting |
| the merchandise that a company sells to customers | merchandise inventory |
| another name for net income | net earnings |
| excess of total revenues over total expenses | net income |
| excess of total expenses over total revenues | net loss |
| another name for net income | net profit |
| a liability evidenced by a written promise to make a future payment | note payable |
| activities that create revenue or expense in the entity's major line of business; a scetion of the statement of cash flows | operating activities |
| the claim of the owners of a business to the assets of the business | owners' equity |
| the amount of stockholders' equity that stockholders have contributed to the corporation | paid in capital |
| an association of two or more persons who co own a business for a profit | partnership |
| another name for property, plant, and equipment | plant assets |
| long live assets, such as land, buildings, and equipment used in the operation of the business | property, plant, and equipment |
| a business with a single owner | proprietorship |
| the amount of stockholders' equity that the corporation has earned through profitable operation and has not given back to stockholders. | retained earnings |
| increase in retained earnings from delivering goods or services to customers or clients | revenues |
| the reason for ignoring the effect of inflation in the accounting records, based on the assumption that the dollar's purchasing power is relatively stable. | stable monetary unit assumption |
| reports cash receipts and cash payment classified according to the entity's major activites: operating, investing, and financing | statement of cash flows |
| another name of balance sheet | statement of financial position |
| another name for income statement | statement of operations |
| summary of the changes in the retained earnings of a corporation during a specific period | statement of retained earnings |
| shares into which the owners' equity of a corporation is divided | stock |
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forevermoody
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