Accounting Quiz 1

Front 1

transaction

Back 1

an exchange between an entity and other parties

Front 2

continuity assumption

Back 2

the concept that businesses will operate into the foreseeable future

Front 3

balance sheet

Back 3

reports assets, liabilities, and stockholders equity

Front 4

liabilities

Back 4

probable debts or obligations to be paid with assets or services

Front 5

assets = liabilities + stockholders equity

Back 5

the fundamental accounting model

Front 6

note payable

Back 6

the account that is credited when money is borrowed from a bank

Front 7

conservatism

Back 7

the concept to exercise care not to overstate assets and revenues or understate liabilities and expenses

Front 8

historical cost principle

Back 8

the concept that assets should be recorded at the amount paid on the exchange date

Front 9

account

Back 9

a standardized format used to accumulate data about each item reported on financial statements

Front 10

dual effects

Back 10

every transaction has at least two effects

Front 11

retained earnings

Back 11

cumulative earnings of a company that are not distributed to the owners

Front 12

current assets

Back 12

economic resources expected to be used or turned into cash within one year

Front 13

separate-entity assumption

Back 13

business transactions are separate from the transactions of the owners

Front 14

reliability

Back 14

useful information should be verifiable, unbiased, and representative of reality

Front 15

debits

Back 15

increase assets; decrease liabilities and stockholders equity

Front 16

accounts receivable

Back 16

amounts owed from customers

Front 17

unit-of-measure assumption

Back 17

the concept that states that accounting information should be measured and reported in the national monetary unit

Front 18

materiality

Back 18

relatively small amounts not likely to influence users' decisions are to be recorded in the most cost-beneficial way

Front 19

relevance

Back 19

useful information has predictive and feedback value

Front 20

stockholders equity

Back 20

financing provided by owners and by business operations