Accounting Test 1

Front 1

information system that measures, processes, and communicates financial information about an identifiable economic entity.

Provides information for decision making.

Back 1

Accounting

Front 2

economic unit that sells goods and services at prices that will provide an adequate return to its owners

Back 2

Business

Front 3

earning enough income to attract and hold investment capital

Back 3

Profitability

Front 4

keeping sufficient cash on hand to pay debts as they fall due

Back 4

Liquidity

Front 5

performance measures?

Back 5

cash flow (for liquidity), net income or loss (for profitability), and ratio of expenses to revenue (for operating activities)

Front 6

internal users

Back 6

management accounting

Front 7

generating and communicating accounting information in financial statements

Back 7

financial accounting

Front 8

mechanical and repetitive process of recording financial transactions and keeping financial records

Back 8

bookkeeping

Front 9

protects investing public by regulating the issuing, buying, and selling of stocks in U.S.

Back 9

securities and exchange commision

Front 10

-What is measured?
-When should measurement be made?
-What value should be placed on the item being measured?
-How should what is measured be classified?

Back 10

Basic Accounting Questions

Front 11

economic events that affect a business's financial position

Back 11

business transaction

Front 12

purchase, sale, payment, collection, or loan

Back 12

exchange of value

Front 13

physical wear and tear on machinery, losses due to fire or theft

Back 13

nonexchange of value

Front 14

unincorporated business owned by one person

Back 14

sole proprietorship

Front 15

unincorporated business owned by two or more people

Back 15

partnership

Front 16

business unit chartered by the state and legally seperate from its owners (the stockholders)

- enables companies to amass large amounts of capital
- stockholders are at risk of loss only to the extent of the investment, and ownership can be transferred without affecting operations

Back 16

corporation

Front 17

distributions of earnings to stockholders

Back 17

dividends

Front 18

Assets = Liabilities + Stockholder's Equity

Back 18

Accounting Equation

Front 19

economic resource of a business that are expected to benefit future operations

ex. cash, accounts receivable, inventory, buildings, equipment, patents, copyrights

Back 19

Assets

Front 20

business's present obligations to pay cash, transfer assets, or provide services to other entities in future

ex. $ owed to bank, amounts owed to creditors for goods bought on credit, taxes owed to government

Back 20

Liabilities

Front 21

claims by owners of a corporation to the assets of a business

Back 21

stockholder's equity

Front 22

accumulation of profits and losses of a company since its inception, less total dividends declared

Back 22

retained earnings

Front 23

revenues & expenses

-measure business's success or failure in achieving profitability

Back 23

income statement

Front 24

changes in retained earnings in accounting period

Back 24

statement of retained earnings

Front 25

financial position of a business as of a certain date

-resources of business=assets
-debts of a business=liabilities
-owner's financial interest in business=stockholder's equity

Back 25

balance sheet

Front 26

discloses the cash flows that result from the business's operating, investing, and financial activities during the accounting period

Back 26

statement of cash flows

Front 27

conventions, rules, and procedures that constitute acceptable accounting practice at a given time.

Back 27

GAAP generally accepted accounting principle