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Accounting Test 1
Chapters 2 and 3
| Question | Answer |
|---|---|
| a balance sheet format that lists assets on the left and liabilities and stockholders' equity on the right | account format |
| an expense or a revenue that occurs before the business pays or receives cash. opposite of deferall | accrual |
| accounting that records the impasct of a business event as it occurs, regardless of whether the transaction affected cash | accrual accounting |
| an expense incurred but not yet paid in cash | accrued expense |
| a revenue that has been earned but not yet received in cash | accrued revenue |
| the cumulative sum of all depreciation expense from the date of acquiring a plant asset | accumulated depreciation |
| a list of all the ledger accounts with their adjusted balances | adjust trial balance |
| the asset's cost minus accumulated depreciation | book value (of a plant asset) |
| accounting that records only transactions in which cash is received or paid out | cash-basis accounting |
| a balance sheet that shows current assets separate from long-term assets, and current liabilites separate from long-term liabilities | classified balance sheet |
| the rpocess of preparing the accounts to begin recording the next period's transactions. Consists of journalizing and posting the closing entries to set the balances of the revenue, expense, and dividends account to zero | closing the books |
| entries that transfer the revenue, expense, and dividends balances from these respective accounts to the retained earnings account | closing entries |
| an account that always has a companion account and whose normal balance is opposite that of the companion account | contra account |
| 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 longer than a year | current asset |
| A debt due to be paid within one year or withing the entity's operating cycle if the cycle is longer than a year | current liability |
| current assets divided by current liabilities. Measures a company's ability to pay current liabilities with current assets | current ratio |
| ratio of total liabilities to total assets. States the proportion of a company's assets that is financed with debt | debt ratio |
| an adjustment for which the business paid or received cash in advance. Examples include prepaid rent, prepaid insurance, and supplies | deferral |
| allocation of the cost of a plant asset to expense over its useful life | depreciation |
| measure of how quickly an item can be converted to cash | liquidity |
| an asset that is not a current asset | long term asset |
| a liability that is not a current liability | long term liability |
| the basis for record expecses. Direct accountants to identify all expenses incurred during the period, to measure the expenses, and to match them against the revenues earned during that same period | matching principle |
| an income statement that contains subtotals to highlight important relationships between revenues and expenses. | multi-step income statement |
| time span during which cash is paid for goods and services that are sold to customers who pay the business in cash | operating cycle |
| asset, liability, and stockholders' equity accounts that are not closed at the end of the period | permanent accounts |
| long-live assets, such as land, buildings, and equipment, used in the operation of the business. also called fixed assets | plant assets |
| a category of miscellaneous assets that typically expire or get used up in the near future. | prepaid expense |
| a balance-sheet format that lists assets at the top, followed by liabilites and stockholders' equity below | report format |
| the basis for recording revenues, tells accountants when to record revenue and the amount of revenue to record | revenue principle |
| an income statement that lists all the revenues together under a heading such as revenues or revenues and gais. Expenses appear in a separate category call expenses or perhaps expenses and losses | single-step income statement |
| the revenue and expense accounts that relate to a limited period and are closed at the end of the period, such as dividends | temporary account |
| ensure that accounting information is reported at regular intervals | time period concept |
| a liability created when a business collects cash from customers in advance of earning the revenue. The obligation is to provide a product or service in the future. | unearned revenue |
| the record the of the changes that have occured in a particular asset, liability, or stockholders' equity during a period. the basic summary device of accounting | account |
| a liability for an expense that has not yet been paid by the company | accrued liability |
| money and any medium of exchange that a bank accepts at face value | cash |
| list of a company's accounts and their account numbers | chart of accounts |
| the right side of an account | credit |
| the left side of an account | debit |
| the chronological accounting record of an entity's transactions | journal |
| the book of accounts and their balances | ledger |
| copying amounts from the journal to ledger | posting |
| any even that has a financial impact on the business and can be measured reliably. | transaction |
| a list of all the ledger accounts with their balances | trial balance |
Created by:
forevermoody
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