Financial Accounting Test #1

Front 1

Accouting

Back 1

measures business activities, processes data into reports and communicates results to people.

Front 2

Financial Statements

Back 2

report information about a business entity

Front 3

Financial accouting

Back 3

branch of accounting that provides info to people outside the firm

Front 4

Entity

Back 4

an organization or a section of an organization that, for accounting purposes, stands apart from other organizations and individuals as a seperate economic unit

Front 5

Reliability Principle

Back 5

ensures that accounting records and statements are based on the most reliable data available. Also called the objectivity priniciple

Front 6

Cost principle

Back 6

states that assets and services should be recorded at their actual cost

Front 7

Going-Concern conept

Back 7

assumes that the entity will remain in operation long enough to use existing assets for their intended purpose

Front 8

Stable-Monetary-Unit concept

Back 8

basis for ignoring the effect of inflation in the accounting records, assuming dollar's purchasing power is relatively stable

Front 9

What are the three activities dealing with the statement of cash flows

Back 9

operating, investing and financing activities.

Front 10

What are some examples of assets

Back 10

cash, accounts and notes receivable, inventory, prepaid expenses, land, buildings, equipment and furniture

Front 11

What are some examples of liabilities

Back 11

any type of payable(note, accounts, etc)

Front 12

What are some examples of OE

Back 12

common stock, retained earnings, dividends, revenues, and expenses

Front 13

Journal

Back 13

The chronological accounting record of an entity's transactions

Front 14

Ledger

Back 14

book of accounts and their balances

Front 15

Trial balance

Back 15

A list of all the ledger accounts with their balances

Front 16

Accrual accounting

Back 16

accounting that records the impact of a business event as it occurs regardless of whether the transaction affected cash

Front 17

Examples of Deferrals

Back 17

prepaid rent, prepaid insurance, and supplies

Front 18

Depreciation

Back 18

expense associated with spreading the cost of a plant asset over its useful life

Front 19

Accrual

Back 19

an expense or a revenue that occurs before the businesses pays or receives cash. opposite of a deferral

Front 20

Prepaid expense(A, L or OE)?

Back 20

assets

Front 21

Plant assets

Back 21

long-lived tangible assets such as land buildings, furniture, machinery, and equipment;

Front 22

All plant assets but land decline in usefulness and this decline is an...

Back 22

expense

Front 23

What is the process of allocating cost to expense?

Back 23

depreciation

Front 24

Matching principle

Back 24

accounting matches the expense against revenue

Front 25

Accumulated depreciation and what kind of account is it?

Back 25

the cumulative sum of all depreciation expense from the date of acquiring a plant asset; a contra asset

Front 26

What are the two characteristics of contra asset

Back 26

always has a companion account; its normal balance is opposite of the companion account

Front 27

Accrued expense

Back 27

an expense incurred but not yet paid in cash

Front 28

How are all accrued expenses recorded

Back 28

debit expense and credit liability

Front 29

All accrued revenues are accounted for similarly in that...

Back 29

debit a receivable and credit a revenue

Front 30

What is an unearned revenue(A, L, OE??)

Back 30

Liability