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22 Cards in this Set
- Front
- Back
field of accounting may best be described as
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the art of interpreting, measuring and describing economic activity
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GAAP principles
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may change over time.
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Financial statements are prepared
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for teh benefit of persons outside the business organization
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The accounting systems of most buisnesses
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are tailored to meet the organizations needs
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Accouting info is primarily directed towards the needs of:
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investors and creditors
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Characteristic of finaial accounting
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its preparation requires judgement
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the principle of adequate disclosure means
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that any financial facts that a reasonbly informed person would consider necessary for the proper interpretation of the financial statements
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Owner's equity in a business increases as a result of:
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earnings from profitable operations of the business
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This best defines an asset
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an economic resource owned by a business and expected to benefit future operations
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a balance sheet
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shows the assets liabilites and owners equity of a business entity valued in conformity with GAAP
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the following is not a GAAP re valuation of assets
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safety principle. These are: cost principle, objectivity principle and going concern principle.
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the following are correct when a corp uses cash to pay for expenses
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total assets, retained earnings, and owners equity will all decrease
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payment of a business debt not including interest
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decreases total assets
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corp borrowed 70k cash from bank, which had no effect on...
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owner's equity
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a transaction caused an increase in both assets and OE, this could have been
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a sale of service to a customer producing revenue
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the price of the goods sold or services rendered during a given accounting period is called
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revenue
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accumulated depreciation is:
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the depreciation expense recorded on an asset to date
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on the adjusted trail balance retained earnings is:
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stated at the period-beginning amount
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the concept of materiality
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justified ignoring the matching principle or the realization principle in certain circumstances
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income summary appears on which financial statement
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does not appear on any financial statement
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during the closing period
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all revenue accounts are debited and expense accounts are credited
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The purpose of making closing entries is to
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prepare revenue and expenses accounts for the recording of the next period's revenue and expenses.
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