Quiz for acc 101 exam 1

Expenses: Decreases in retained earnings that represent costs of assets or services used to earn revenues

• GAAP: “Generally accepted accounting principles” the rules the specify acceptable acc practices

international acc standards board
hopes to create more harmony among acc practices of different countries

• Matching: A company records the expenses incurred to generate the revenue reported.

• Cost: Information is based on actual costs incurred in transactions

liabilties-cash received in advance of providing products and services

a business owned by one person. has unlimited liability. no income tax for the business

Corporation: Is a legal entity separate and distinct from its owners

Income statement: Revenues- expenses = net income

the language of business

record containing all accounts used by a company

current assets/current liabilties

revs earned in a period that are both unrecorded and not yet received in cash or other assets

• Cost: Information is based on actual costs incurred in transactions

a business owned by one person. has unlimited liability. no income tax for the business

Permanent accounts: Assets, liabilities, and equity accounts are not closed; these accounts

DEFERRED- items paid for in advance of receiving their benefits

business owned by 2 or more people. this is NOT legally separate from its owners.

• Monetary Unit: we can express transactions and events in monetary units.

• Cost: Information is based on actual costs incurred in transactions

net income/net sales

Assets = Liability + Equity

the language of business

assets

• GAAP: “Generally accepted accounting principles” the rules the specify acceptable acc practices

• Full disclosure: A company reports details behind financial statements that would impact users' decisions

• Objectivity: The accounting guideline prescribing that financial statement information be supported by independent, unbiased evidence other than someone's belief or opinion

a temporary account(only used for the closing process) that contains a credit for the sum of all revenues (and gains) and a debit for the sum of all expenses and loses.

its balance equals net income/loss and is transferred to retained earnings

• Objectivity: The accounting guideline prescribing that financial statement information be supported by independent, unbiased evidence other than someone's belief or opinion

Statement of Retained Earnings: retained earnings from year before + net income – dividends= retained earnings this year.

international acc standards board
hopes to create more harmony among acc practices of different countries

Internal Transactions: occurs within a single entity and are more difficult to record because source documents may not always be present

Account: A record of the increases and decreases in a specific asset, liability, equity, revenue, or expense

Balance Sheet:
• Add up all assets (cash, supplies, equipt).
• Add up all liabilities(accounts payable)
• Add up all equity( common stock, retained earnings)

international acc standards board
hopes to create more harmony among acc practices of different countries

• GAAP: “Generally accepted accounting principles” the rules the specify acceptable acc practices

• Going Concern: Financial statements reflect the assumption that the business continues operating

• Specific Acc: Usually created by a pronouncement from an authoritative body

revs earned in a period that are both unrecorded and not yet received in cash or other assets

• Business Entity: Every business is accounted for separately from its owner or owners.