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60 Cards in this Set
- Front
- Back
A transaction that increases Liabilities and Equity at the same time.
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Is not possible
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Identifying Transactions, Recording transactions, and communication transactions should be performed in what order?
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Identifying, recording, and communicating
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The proper order for these transactions are Identifying, recording, and communication
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True
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Who is an external user of accounting information
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Company Customers
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Internal users of accounting information are
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Sales staff, officers and directors, budget officers
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Managers and internal users of accounting information
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Service , Research and development , Production ,Human resource
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This person is a manager but is not an internal user of accounting information
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Partner in a CPA firm charged with conduction the company's external audit.
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The Cost principle
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accounting information based on actual cost. Does not take into consideration the actual value of the asset, it only records the actual cost paid for the asset
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The going-concept principle
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something that remains in operation in the foreseeable future
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The business entity principle
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requires that a business to be accounted for separately from its owners and any other entity.
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The monetary unit principle
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transactions and events can be expressed in money units
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Note payable
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liability expresses written promise to pay a definite sum of money on demand or on a specific future date
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Note receivable
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Asset consisting of a written promise to receive a definite sum of money on demand or on a specific future date
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No-par value stock
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Stock class that has not been assigned a par (or stated) value by the corporate charter
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Conservatism Principle
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less optimistic estimate when two estimates are about equally likely
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less optimistic estimate when two estimates are about equally likely
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The Equity term
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increase in Expenses will decrease equity
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True
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Owners withdrawals will decrease equity
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True
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What is the relationship between net income/loss and the balance in owners equity
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Net loss - beginning owners equity to calculate ending owners equity AND Net income + beginner owners equity will calculat ending owners equity
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Basic Accounting Equation
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Assets = liabilities + Owners Equity
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What Financial Statement refers to a specific period of time
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Balance Sheet
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Total Assets and Total Liabilities are reported on this statement
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Balance Sheet
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Statement of Cash flows represents what activities
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Operating, Financing, Investing
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When equity is subtracted from total assets the amount remaining is known as
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Total Liabilities
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Going - concern
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A business has an indefinite life span
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Business entity
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A business is distinct from its owners
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Cost principle
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assets should be recorded at cost, not appraised value
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Revenue Recognition Principle
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Revenues are recorded when earned
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Objectivity Principle
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Independent, Unbiased evidence should be used
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When cash is recieved from a customer in payment for an account receivable, how are the elements of the accounting equation effected
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Increase assets (cash) and decrease assets (ar)
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What happens when an owner invests more money into a company
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Increase in cash and an increase in equity
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When you purchase equipment on account what happens to the components of the accounting eqyation
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Increase in equipment and increase in liabilities
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Any users of a company's financial statement is considered an outside user
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TRUE
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To Walmart, bank loan officer, corporation shareholders,and the IRS are all examples of internal users of Walmart's financial statements
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FALSE
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What does CPA stand for
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Certified Public Accountant
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What does CMA stand for
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Certified Management Accountant
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What does CIA
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Certified Internal Auditor
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What are they main groups that establish GAAP
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FASB, SEC
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Informs the accountant that financial transactions completed by the entity should be recorded at the cost or actual amounts involved in the transaction and not some other measure such as liquidation values
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Historical Cost Principle
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Sole Proprietorship
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Separate accounting entity but it is not a separate legal entity
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Corporation
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Responsible for its own acts,, and its own debts, and may hold property in its own name rather than the names of it shareholders
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The basic accounting equation
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Assets - Liabilities = equity
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Business Entity
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based on the notion that transactions and events should be measured and recorded from the vantage point of the business entity itself and not from the vantage point of its owners.
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Excess of revenues over profit is called
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Net profit
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Statement of Cash flows
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A statement that shows where a company's cash comes from (receipts) and where it went (payments) during a period of time
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Financial Accounting
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Accounting aimed at serving external users
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Managerial Accounting
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is the area of accounting aimed at serving the decision making needs of internal users
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Bank loan officer is
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an external user
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Company president, and company's controllers are
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Internal users
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Balance sheet
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reports all assets, all liabilities, and owners equity for a particular date
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money owed to an outside entity
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Liabilities
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a company's debts
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Liabilities
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Owners claims to an organizations assets are called
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Owner's Equity or Owner's Capital
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Partnership
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Does not issue stock and cant not have shareholders
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Bookkeeping
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The part of accounting that involves recording economic transactions and events, either electronically or manually
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What does assets include
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land, buildings, equipment, inventories, supplies, cash, all investments
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What two statements report net income
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Income statement and Statement of Owners Equity
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Purpose of a financial audit
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is to determine whether the financial statements fairly reflect the company's financial position and operating results in accordance with GAAP and to add credibility to the information in the statements
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Return on investment is calculated how?
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Dividing net income for the period by the average total assets of the period
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What are expenses?
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an outflow of assets as a result of the major or central operations of a business. In some instances, expenses may result in increases in Liabilities.
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