Test Answers on Financial Accounting Flashcards

account receivable – sold something (or provided service) on accounts (with terms such as net 30) issues with accounts receivable 1. Recognizing (how do we recognize A/R) 2. Valuing (how do we value A/R) 3. Disposing (how do we dispose A/R) types of receivable – account receivable: amounts that customers owe on account (30-60 days) […]

Process costing a product costing system that accumulates costs according to processes or departments When is Process costing used? Used when outputs are standardized/ homogeneous How often is the Production Cost report prepare? Is prepared each period (e.g., each month) for each department In production cost report, what do each department has? Each Department has […]

accounting equation assets=liabilities+owner’s equity account the increases or decreases in a specific item caused by business transactions are recorded in an accounts payable amount of money owed to the creditors of a business accounts receivable the total amount of money to be received in the future for goods and services sold on credit asset any […]

Financial Accounting (FI) Is concerned with recording the financial impacts of business processes as they are executed. Businesses use these data to generate financial statement to meet legal or regulatory reporting requirements. Management Accounting (CO) Provides the information the organization needs to effectively manage the various processes. The reports focus on costs and revenues which […]

Managerial Accounting A field of accounting that provides economic and financial information for managers and other INTERNAL users; places emphasis on special purpose accounting. What are the 3 distinguishing features of Managerial Accounting vs. Financial Accounting? 1. Primary users of reports in financial accounting is EXTERNAL users: stockholders, creditors, and regulators. The primary users of […]

accounting the process of measuring economic activity of an entity in monetary terms and communicating results to users four basic financial statements balance sheet, income statement, statement of stockholder’s equity, and statement of cash flows balance sheet listing of a firm’s assets, liabilities, and stockholder’s equity as of a given date, usually the end of […]

the month in the journal is recorded as the first entry on a page cash payment check stubs and carbon copies provide information about paying an account payable the flow of data through the accounting information systems does not include entering the balance journalizing does not include four column account instead of T accounts, businesses […]

Operating expenses are subtracted from fees earned for a service business and from gross profit for a merchandising business True Net sales is equal to sales plus cost of merchandise sold False The merchandise inventory account is found on the balance sheet True Net income of loss may appear on the income statement of both […]

The chart of accounts is a special ledger used in accounting systems. True In the first month of operations, the total of the debit entries to the Cash account amounted to $1,000 and the total of the credit entries to the Cash account amounted to $600. The Cash account has a 400 Debit Balance The […]

The purpose of accounting is to provide financial information about an economic or social entity. True In a sole proprietorship, the owner is responsible for the debts of the business if the firm is unable to pay. True The separate entity assumption applies only to the corporate form of business. True The form of a […]

One external user of accounting information with a financial interest in a business is an investor. Which of the following is a satisfactory statement of the accounting equation? Assets = Liabilities + Stockholders’ Equity Which of the following is a measure of liquidity? Working capital Which of the following is legally a separate entity from […]

What are the 3 basic forms of business organizations? 1. Sole Proprietorships 2. Partnerships 3. Corporations Closely Held corporation that issues stock to only a few people, often family members Publicly Held A corporation that may have thousands of stockholders and whose stock is traded on a national securities market Sole Proprietorship A business owned […]

What kinds of transactions are recorded in a purchases journal? Purchases of merchandise on account For what are special amount columns in a journal used? Frequently occurring transactions Why are their two account titles in the amount column of the purchases journal? Because the same two accounts are always affected by purchases on account transactions […]

False Controlling means overseeing the company’s day-to-day operations: True The purpose of managerial accounting is to gather, summarize, and report the cost and revenue data relevant to each decision that is made. True Planning, directing, and controlling are a manager’s three primary responsibilities. True Managerial accounting develops reports that help internal parties effectively and efficiently […]

The proprietorship form of business organization generally receives favorable tax treatment relative to a corporation. A business organized as a corporation is owned by its stockholders. The partnership form of business organization is a common form of organization for service-type businesses. Which of the following is not one of the three forms of business organization? […]

What is accounting? -Measures business activities -Processes data into reports and communicates the data to decision makers -is often called the language of business A disadvantage of general partnership is: each partner may conduct business in the name of the entity and make agreements that legally bind all partners True statement for a limited liability […]

Generally accepted accounting principles requires that companies use the ____ of accounting. accrual When is the adjusted trial balance prepared? after adjusting journal entries are posted The type of account and normal balance of Accumulated Depreciation is contra asset, credit The entry to adjust the accounts for wages accrued at the end of the accounting […]

Accounting info. is often divided into two types: Financial and Managerial Financial Accounting (definition): information is reported at fixed intervals (monthly, quarterly, yearly) in general-purpose financial statements. Financial Accounting: What are the financial statements used? Income statement, retained earnings statement, balance sheet, statement of cash flows. Financial Accounting: The financial statements are prepared according to: […]

common stockholders usually have all of the following rights except to participate in the day to day operations Advantages of the corporate form that have led to the growth of this form of business ownership include all of the following except low government regulation Limited liability even in the even of bankruptcy , stockholders in […]

assets resources owned by a business liabilities amounts owed to creditors in the form of debt and other obligations revenue the amounts earned on the sale of a companys product, is the increase in assets or decrease in liabilities expenses are the cost of assets consumed or services used in the process of generating revenue […]

The company’s financial operations must be completed: (3) Fairly, Clearly, Completely The identification, measurement, and communication of financial information about economic entities to interested parties is _______ ____________ __ ___________. Essential characteristics of accounting. Name 3 organizations involved in Standard Setting. 1. SEC Securities and Exchange Commission 2. AMerican Institute of Certified Public Accountants (AICPA) […]