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Accounting Midterm Exam – Flashcards

Brandon Ruffin

7 July 2022

question

Income Statement Equation

answer

Revenue - Expenses

question

Balance Sheet Equation

answer

Assets = Liabilities + Stockholders' Equity

question

Cashflow Statement

answer

Statement that shows cash going in and out. Shows cashflow from operating activities, investing, and financing activities.

question

Short-term Assets

answer

Cash, Accounts Receivable, Inventory, Supplies, etc.

question

Long-term Assets

answer

Equipment, Buildings, Machines, Land, etc.

question

Financial Statements

answer

Income Statement, Retained Earnings, Balance Sheet, and Cashflow Statement.

question

Sole Proprietorship

answer

Advantages: Easy to form, easy to manage, one taxation Disadvantages: Unlimited liability, difficult to transfer ownership, and limited to access capital.

question

Partnership

answer

Advantages: Easy to form, easy to manage, one taxation Disadvantages: Unlimited liability (more limited than sole proprietorship), difficult to transfer ownership, and limited to access capital.

question

Corporation

answer

Advantages: Easy access to capital markets, professional management, limited liability, and unlimited life. Disadvantages: Double taxation and misuse of resources

question

Insider Trading

answer

Someone from the Management or Board of Directors leaks information to stockholders' before the information hits the market.

question

SEC (Security Exchange Commissions)

answer

Overlooks corporations in the NYSE, NASDAQ, AE, etc.

question

FASB (Financial Accounting Standard Board)

answer

Made up of 7 members and 161 "statements" issued each year. Created in 1973

question

IASB (International Accounting Standard Board)

answer

27 countries with members. 105 countries use this set of rules.

question

Sarbanes/Oxley Act (Sox)

answer

Congress passed this act in 2004 which enabled people the right to sue corporations for falsifying accounting statements.

question

Accounting Principles

answer

Going Concern, Time Period, Cost Concept, and Full Disclosure.

question

Relevant Information

answer

Information that is timely, predictive value, and gives feedback.

question

Reliable Information

answer

Information that is truthful, neutral, and has verifiability.

question

Current Assets

answer

Assets converted into cash within one year or operating cycle. Examples: Cash and Cash Equivalent, Short Term Investment (Marketable Securities), Accounts Receivable, Inventories, Prepaid Insurance, Supplies, etc.

question

Long Term Investments

answer

Buying another companies stock or bonds, and waiting at least one year before selling. (3-year and over 3-years)

question

Property, Plant, and Equipment

answer

Land, Buildings, Equipment, and Furniture.

question

Intangible Assets

answer

Goodwill, Trademark, Copyright, and Franchise.

question

Current Liabilities

answer

Anything that you owe that must be paid within one year. Examples: Accounts Payable, Rent Payable, Salaries and Wages Payable, Taxes Payable, and Notes Payable.

question

Long Term Liabilities (Debt)

answer

Anything that must be paid in 1+ years. Example: Bonds Payable

question

Stockholders' Equity

answer

Common Stock, Preferred Stock, and Retained Earnings.

question

Working Capital

answer

Current Assets - Current Liabilities

question

Current Ratio

answer

Current Assets / Current Liabilities

question

Debt to Total Assets

answer

Total Liabilities / Total Assets

question

Earnings Per Share (EPS)

answer

Net Income / # of Common Shares Outstanding

question

Accounting Cycle

answer

Record Business Transactions (Record to Journal), Post to Ledger, Trial Balance, Adjusting Entries, Adjusted Trial Balance, Prepare Financial Statements, Closing Entries, and Reversing Entries.

question

T-Account

answer

Shorthand representation of a general ledger account.

question

Debit Side

answer

Left side of any account.

question

Credit Side

answer

Right side of any account.

question

Cash Basis

answer

All revenue and expenses must be in cash.

question

Deferral

answer

Cash received or paid first. Example: Paid 3-year subscription $3,000 in cash

question

Accrual

answer

Activity precedes cash. Example: Received rent 2-months advance

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question

Income Statement Equation

answer

Revenue - Expenses

question

Balance Sheet Equation

answer

Assets = Liabilities + Stockholders' Equity

question

Cashflow Statement

answer

Statement that shows cash going in and out. Shows cashflow from operating activities, investing, and financing activities.

question

Short-term Assets

answer

Cash, Accounts Receivable, Inventory, Supplies, etc.

question

Long-term Assets

answer

Equipment, Buildings, Machines, Land, etc.

question

Financial Statements

answer

Income Statement, Retained Earnings, Balance Sheet, and Cashflow Statement.

question

Sole Proprietorship

answer

Advantages: Easy to form, easy to manage, one taxation Disadvantages: Unlimited liability, difficult to transfer ownership, and limited to access capital.

question

Partnership

answer

Advantages: Easy to form, easy to manage, one taxation Disadvantages: Unlimited liability (more limited than sole proprietorship), difficult to transfer ownership, and limited to access capital.

question

Corporation

answer

Advantages: Easy access to capital markets, professional management, limited liability, and unlimited life. Disadvantages: Double taxation and misuse of resources

question

Insider Trading

answer

Someone from the Management or Board of Directors leaks information to stockholders' before the information hits the market.

question

SEC (Security Exchange Commissions)

answer

Overlooks corporations in the NYSE, NASDAQ, AE, etc.

question

FASB (Financial Accounting Standard Board)

answer

Made up of 7 members and 161 "statements" issued each year. Created in 1973

question

IASB (International Accounting Standard Board)

answer

27 countries with members. 105 countries use this set of rules.

question

Sarbanes/Oxley Act (Sox)

answer

Congress passed this act in 2004 which enabled people the right to sue corporations for falsifying accounting statements.

question

Accounting Principles

answer

Going Concern, Time Period, Cost Concept, and Full Disclosure.

question

Relevant Information

answer

Information that is timely, predictive value, and gives feedback.

question

Reliable Information

answer

Information that is truthful, neutral, and has verifiability.

question

Current Assets

answer

question

Long Term Investments

answer

Buying another companies stock or bonds, and waiting at least one year before selling. (3-year and over 3-years)

question

Property, Plant, and Equipment

answer

Land, Buildings, Equipment, and Furniture.

question

Intangible Assets

answer

Goodwill, Trademark, Copyright, and Franchise.

question

Current Liabilities

answer

Anything that you owe that must be paid within one year. Examples: Accounts Payable, Rent Payable, Salaries and Wages Payable, Taxes Payable, and Notes Payable.

question

Long Term Liabilities (Debt)

answer

Anything that must be paid in 1+ years. Example: Bonds Payable

question

Stockholders' Equity

answer

Common Stock, Preferred Stock, and Retained Earnings.

question

Working Capital

answer

Current Assets - Current Liabilities

question

Current Ratio

answer

Current Assets / Current Liabilities

question

Debt to Total Assets

answer

Total Liabilities / Total Assets

question

Earnings Per Share (EPS)

answer

Net Income / # of Common Shares Outstanding

question

Accounting Cycle

answer

Record Business Transactions (Record to Journal), Post to Ledger, Trial Balance, Adjusting Entries, Adjusted Trial Balance, Prepare Financial Statements, Closing Entries, and Reversing Entries.

question

T-Account

answer

Shorthand representation of a general ledger account.

question

Debit Side

answer

Left side of any account.

question

Credit Side

answer

Right side of any account.

question

Cash Basis

answer

All revenue and expenses must be in cash.

question

Deferral

answer

Cash received or paid first. Example: Paid 3-year subscription $3,000 in cash

question

Accrual

answer

Activity precedes cash. Example: Received rent 2-months advance

Accounting Midterm Exam – Flashcards

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