Acc 101 Exam 1

Front 1

GAAP

Back 1

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

Front 2

• Business Entity:

Back 2

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

Front 3

• Cost principle

Back 3

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

Front 4

• Going Concern

Back 4

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

Front 5

• Monetary Unit

Back 5

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

Front 6

• Matching

Back 6

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

Front 7

• Full disclosure

Back 7

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

Front 8

• Revenue recognition.

Back 8

• Revenue recognition: Revenue is recorded only when the earnings process is complete.

Front 9

• General Acc:

Back 9

• General Acc: Derived from long-used and generally accepted accounting practices

Front 10

• Specific Acc

Back 10

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

Front 11

• Objectivity

Back 11

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

Front 12

accounting equation

Back 12

Assets = Liability + Equity

Front 13

External Transactions.

Back 13

External Transactions: Occur b/w 2 different entities and are easy to record because there are always source documents evidencing the transaction.

Front 14

Internal Transactions

Back 14

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

Front 15

Income statement

Back 15

Income statement: Revenues- expenses = net income

Front 16

Statement of Retained Earnings

Back 16

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

Front 17

Balance Sheet:

Back 17

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

Front 18

Statement of Cashflows:

Back 18

Statement of Cashflows: debits and credits of cash.

Front 19

Return on assets

Back 19

Return on assets: ROA= net income/average total assets
• Average total assets is this years+last years/2

Front 20

Account

Back 20

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

Front 21

Corporation

Back 21

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

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Expenses

Back 22

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

Front 23

Permanent accounts

Back 23

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

Front 24

Contra account

Back 24

Contra account: An account linked with another account that has an opposite normal balance and that is subtracted from the balance of the related account

Front 25

oppurtunities in acc

Back 25

financial, managerial, taxation,

Front 26

accounting

Back 26

the language of business

Front 27

2 most common firls of acc in practice

Back 27

managerial and financial

Front 28

IASB

Back 28

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

Front 29

sole proprietorship

Back 29

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

Front 30

partnership

Back 30

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

Front 31

ledger

Back 31

record containing all accounts used by a company

Front 32

prepaid accoutns

Back 32

assets

Front 33

debt ratio

Back 33

total liabilities/total assets

Front 34

prepaid expenses

Back 34

DEFERRED- items paid for in advance of receiving their benefits

Front 35

accrued expenses

Back 35

costs that are incurred in a period but are both unpaid and unrecorded

Front 36

unearned revenues

Back 36

liabilties-cash received in advance of providing products and services

Front 37

accrued revenues

Back 37

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

Front 38

income summary

Back 38

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

Front 39

profit margin

Back 39

net income/net sales

Front 40

current ratio

Back 40

current assets/current liabilties