Test Answers on Financial Accounting Flashcards

creditor A business that gives you a loan is: Obtain a car loan Having a low credit score can make it more difficult to: One credit report from each credit bureau How many free credit reports are you legally entitled to each year? Paying off your credit card bill Which of the following actions would […]

Consumer A person or organization that buys/uses goods or services Financial literacy The knowledge and skill set necessary to be an informed consumer and manage finances effectively Credit The granting of a loan and the creation of a debt; any form of deferred payment Loan A debt evidence by a \”note: which specifies the principle […]

5 C’s of Credit character, capacity, capital, collateral, conditions Affinity Card a card issued in conjunction with a specific charity or organization. That group name is on the card and a % of purchases is donated to that group APR on unpaid balance If you are a credit user, the most important decision factor is […]

Capital Costs purchases of land, buildings, and equipment CON legislation/social security amendments Certificate of need legislation 2 programs were enacted in 1974 in attempts to slow the growth in healthcare capital costs: National Health Planning and Resources Development Act, Social Security Amendments- both compelled hospitals to get permission from a governmental entity before major capital […]

Accounting The process of recording, summarizing, analyzing, and interpreting financial activities to allow individuals and companies to make informed judgements and decisions Accounting equation Assets= Liabilities+ Owners equity. Referred to as the basic accounting equation Accounting period Time frame of which accounting records are maintained. Anywhere from a month to a year. Accounts payable- The […]

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 […]

FICA Federal Insurance Contributions Act Tax FICA shows up on paychecks as? social security and medicare Half is paid by the _____ unless you are _____. employer self employed Social security provides benefits for retirees, the disabled, and children of decreased workers Medicare provides health insurance for Americans aged 65 and older who have worked […]

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 […]

Personal financial planning the process of managing your money to achieve personal economic satisfaction advantages of personal financial planning increased effectiveness in obtaining using and protecting resources. control by avoiding debt, bankruptcy and dependence on others for security. improved relationships resulting from well planned and communicated financial decisions. freedom from financial worries: three main decision […]

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 […]