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Accounting Test 1

Chapter 1

QuestionAnswer
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
Created by: forevermoody