Intro To Financial Accounting Answers – Flashcards

question
is a financial information system that tracks and records and organization's business transactions and aggregates them into reports for decision makers both inside and outside the business.
answer
Financial Accounting
question
an event that has consequences for a business' financial condition. (the event could be external or internal)
answer
Transaction
question
Each business transaction is related to one of these types of activities
answer
Operating, Investing, and Financial
question
transactions are formally recorded in a database called a __________________ and then organized into a _______________.
answer
Journal, ledger
question
The most common financial accounting reports are the
answer
balance sheet, income statement, and the statement of cash flows
question
are used by decision makers inside and outside the business.
answer
Financial statements
question
this tells us when and how to measure, record, and classify business transactions and aggregate them into financial reports.
answer
financial reporting concepts and principles
question
provide information that is consistent over time and across different businesses.
answer
financial reporting systems
question
are independent parties who periodically examine a company's financial statements and the systems, internal controls and records used to produce statements.
answer
auditors
question
is an information feedback loop between users of financial statements and the decision makers within the organization.
answer
the financial reporting system
question
details the sources and uses of cash by the entity over an accounting period.
answer
statement of cash flows
question
are those activities that are related to the delivery of goods and services.
answer
operating activities
question
are those activities that are related to the purchase and sale of long-lived assets.
answer
Investing activities
question
relate to borrowing or retiring debt and to increase or decrease owner's equity.
answer
Financial activities
question
details the entity's operating performance during a specific period of time. (an accounting period)
answer
income statement
question
lists the revenues earned and expenses incurred during the period; subtracting expenses from revenues results in the measurement of net income for the period.
answer
The income statement
question
is the sum of economic benefits the entity has earned during the accounting period in exchange for the goods and services it has provided to its customers.
answer
Sales (Sales Revenue or Revenue)
question
are the assets used or liabilities incurred by the entity during an accounting period to provide the goods and services that generated revenue during the period.
answer
Expenses
question
is the difference between sales and expenses of the accounting period.
answer
Net Income ( Profit, or net profit)
question
net income or profit (net profit) is also referred to as this because it appears on the last line of the income statement.
answer
Bottom Line
question
presents the balances of the various asset, liability, and owner's equity accounts
answer
Balance Sheet
question
A balance sheet is prepared
answer
for a point in time
question
An income statement is prepared
answer
to cover an accounting period
question
A statement of cash flow is prepared
answer
to cover an accounting period
question
Cash held by a business would best be listed as _________ on the balance sheet
answer
an asset
question
a bank loan taken by the business would be listed as
answer
a liability
question
Purchase or sale of building
answer
investing
question
Raising cash from investors
answer
financing
question
Selling products and services
answer
operating
question
Financial Accounting Standards Board (FASB)
answer
sets accounting standards
question
accounts are kept for an entity as distinct from the people who own, rune or do business with the entity.
answer
entity concept
question
financial accounting deals only with things that can be represented in monetary terms.
answer
money measurement concept
question
an entity is expected to remain in operation for the indefinite future.
answer
Going Concern Concept
question
an entity should use the same accounting methods and procedures from period to period unless it has a sound reason to change methods.
answer
Consistency Concept
question
an entity need only apply proper accounting to items that are material
answer
Materiality Concept
question
Any organization that needs to keep and communicate financial records can be
answer
an accounting entity
question
refers to the timeliness and usefulness of the information to its users
answer
Relevance
question
refers to the objectivity and verifiability of the information
answer
Reliability
question
____________is generally given precedence over ______________
answer
reliability, relevance
question
Since financial accounting reports are used to make decisions that affect the entity, financial accounting strives to present information about the entity that is __________ and _________.
answer
relevant, reliable
question
focuses on the economic characteristics of transactions rather than their cash flows
answer
Accrual accounting
question
When applied consistently, __________________ is a means of enhancing the relevance of financial statements
answer
accrual accounting
question
are guidelines that accountants, managers and auditors must follow while preparing and auditing accounting information for external reporting purposes.
answer
Generally Accepted Accounting Principles (GAAP)
question
requires the use of accrual accounting
answer
GAAP
question
tends to be stated as in the form of broad principles
answer
IFRS
question
tends to be stated in the form of bright-line rule
answer
GAAP
question
statement of financial position
answer
balance sheet
question
a snapshot at a specific point in time, of the resources controlled by an entity (assets), the claims against those resources (liabilities), and the owners' residual interest in the entity (owners' equity)
answer
balance sheet
question
- Acquired at measurable cost - Obtained or controlled - Expected future economic benefits - Past transaction or event
answer
asset
question
assets having physical substance
answer
Tangible assets
question
assets that lack physical substance
answer
Intangible assets
question
cash and those assets that are expected to be converted into cash or consumed within 12 months of the balance sheet date
answer
Current assets
question
assets that are expected to provide economic benefits for periods longer than a year.
answer
Non-current assets
question
money owed by customers
answer
accounts receivable
question
goods available for sale
answer
merchandise inventory
question
rent paid in advance for the store
answer
prepaid expenses
question
reduces the recorded value of an asset
answer
accumulated depreciation
question
an asset that is expected to provide economic benefits for three years and does not have physical substance is a
answer
non-current intangible asset
question
represents an obligations of the entity to other parties
answer
liability
question
-a probable future sacrifice of economic resources by entity - economic resource transfer is to another entity - future sacrifice is a present obligation, arising from a past transaction or event
answer
liability
question
obligations that are expected to become due within 12 months of the balance sheet date
answer
Current liabilities
question
obligations that are expected to become due more than 12 months past the balance sheet date.
answer
Non-current liabilities
question
money owed to suppliers who will be paid during the coming year
answer
accounts payable
question
money potentially owed to the tax authorities
answer
taxes payable
question
a loan that must pay back within a year of the balance sheet date
answer
short-term debt
question
money owed to a bank, with payments to be made for more than 12 months from the balance sheet date.
answer
mortgage payable
question
amount remaining after liabilities are deducted from assets
answer
Owners' Equity
question
always equal to total liabilities plus owners' equit
answer
total assets
question
relationship between assets and liabilities plus owners' equity
answer
fundamental accounting equation
question
economic resources obtained or controlled by the entity
answer
Assets
question
financing sources for those resources or assets
answer
Liabilities and owners' equity
question
formalizes the idea that there are two sides to every accounting transaction
answer
dual-aspect concept
question
every accounting transaction has two sides which must be recorded
answer
dual-aspect concept
question
It requires that transactions be recorded in terms of their actual price or cost at the time the transaction occurred.
answer
historical cost concept (cost concept)
question
relevance
answer
market cost
question
reliability
answer
historical cost
1 of

Unlock all answers in this set

Unlock answers
question
is a financial information system that tracks and records and organization's business transactions and aggregates them into reports for decision makers both inside and outside the business.
answer
Financial Accounting
question
an event that has consequences for a business' financial condition. (the event could be external or internal)
answer
Transaction
question
Each business transaction is related to one of these types of activities
answer
Operating, Investing, and Financial
question
transactions are formally recorded in a database called a __________________ and then organized into a _______________.
answer
Journal, ledger
question
The most common financial accounting reports are the
answer
balance sheet, income statement, and the statement of cash flows
question
are used by decision makers inside and outside the business.
answer
Financial statements
question
this tells us when and how to measure, record, and classify business transactions and aggregate them into financial reports.
answer
financial reporting concepts and principles
question
provide information that is consistent over time and across different businesses.
answer
financial reporting systems
question
are independent parties who periodically examine a company's financial statements and the systems, internal controls and records used to produce statements.
answer
auditors
question
is an information feedback loop between users of financial statements and the decision makers within the organization.
answer
the financial reporting system
question
details the sources and uses of cash by the entity over an accounting period.
answer
statement of cash flows
question
are those activities that are related to the delivery of goods and services.
answer
operating activities
question
are those activities that are related to the purchase and sale of long-lived assets.
answer
Investing activities
question
relate to borrowing or retiring debt and to increase or decrease owner's equity.
answer
Financial activities
question
details the entity's operating performance during a specific period of time. (an accounting period)
answer
income statement
question
lists the revenues earned and expenses incurred during the period; subtracting expenses from revenues results in the measurement of net income for the period.
answer
The income statement
question
is the sum of economic benefits the entity has earned during the accounting period in exchange for the goods and services it has provided to its customers.
answer
Sales (Sales Revenue or Revenue)
question
are the assets used or liabilities incurred by the entity during an accounting period to provide the goods and services that generated revenue during the period.
answer
Expenses
question
is the difference between sales and expenses of the accounting period.
answer
Net Income ( Profit, or net profit)
question
net income or profit (net profit) is also referred to as this because it appears on the last line of the income statement.
answer
Bottom Line
question
presents the balances of the various asset, liability, and owner's equity accounts
answer
Balance Sheet
question
A balance sheet is prepared
answer
for a point in time
question
An income statement is prepared
answer
to cover an accounting period
question
A statement of cash flow is prepared
answer
to cover an accounting period
question
Cash held by a business would best be listed as _________ on the balance sheet
answer
an asset
question
a bank loan taken by the business would be listed as
answer
a liability
question
Purchase or sale of building
answer
investing
question
Raising cash from investors
answer
financing
question
Selling products and services
answer
operating
question
Financial Accounting Standards Board (FASB)
answer
sets accounting standards
question
accounts are kept for an entity as distinct from the people who own, rune or do business with the entity.
answer
entity concept
question
financial accounting deals only with things that can be represented in monetary terms.
answer
money measurement concept
question
an entity is expected to remain in operation for the indefinite future.
answer
Going Concern Concept
question
an entity should use the same accounting methods and procedures from period to period unless it has a sound reason to change methods.
answer
Consistency Concept
question
an entity need only apply proper accounting to items that are material
answer
Materiality Concept
question
Any organization that needs to keep and communicate financial records can be
answer
an accounting entity
question
refers to the timeliness and usefulness of the information to its users
answer
Relevance
question
refers to the objectivity and verifiability of the information
answer
Reliability
question
____________is generally given precedence over ______________
answer
reliability, relevance
question
Since financial accounting reports are used to make decisions that affect the entity, financial accounting strives to present information about the entity that is __________ and _________.
answer
relevant, reliable
question
focuses on the economic characteristics of transactions rather than their cash flows
answer
Accrual accounting
question
When applied consistently, __________________ is a means of enhancing the relevance of financial statements
answer
accrual accounting
question
are guidelines that accountants, managers and auditors must follow while preparing and auditing accounting information for external reporting purposes.
answer
Generally Accepted Accounting Principles (GAAP)
question
requires the use of accrual accounting
answer
GAAP
question
tends to be stated as in the form of broad principles
answer
IFRS
question
tends to be stated in the form of bright-line rule
answer
GAAP
question
statement of financial position
answer
balance sheet
question
a snapshot at a specific point in time, of the resources controlled by an entity (assets), the claims against those resources (liabilities), and the owners' residual interest in the entity (owners' equity)
answer
balance sheet
question
- Acquired at measurable cost - Obtained or controlled - Expected future economic benefits - Past transaction or event
answer
asset
question
assets having physical substance
answer
Tangible assets
question
assets that lack physical substance
answer
Intangible assets
question
cash and those assets that are expected to be converted into cash or consumed within 12 months of the balance sheet date
answer
Current assets
question
assets that are expected to provide economic benefits for periods longer than a year.
answer
Non-current assets
question
money owed by customers
answer
accounts receivable
question
goods available for sale
answer
merchandise inventory
question
rent paid in advance for the store
answer
prepaid expenses
question
reduces the recorded value of an asset
answer
accumulated depreciation
question
an asset that is expected to provide economic benefits for three years and does not have physical substance is a
answer
non-current intangible asset
question
represents an obligations of the entity to other parties
answer
liability
question
-a probable future sacrifice of economic resources by entity - economic resource transfer is to another entity - future sacrifice is a present obligation, arising from a past transaction or event
answer
liability
question
obligations that are expected to become due within 12 months of the balance sheet date
answer
Current liabilities
question
obligations that are expected to become due more than 12 months past the balance sheet date.
answer
Non-current liabilities
question
money owed to suppliers who will be paid during the coming year
answer
accounts payable
question
money potentially owed to the tax authorities
answer
taxes payable
question
a loan that must pay back within a year of the balance sheet date
answer
short-term debt
question
money owed to a bank, with payments to be made for more than 12 months from the balance sheet date.
answer
mortgage payable
question
amount remaining after liabilities are deducted from assets
answer
Owners' Equity
question
always equal to total liabilities plus owners' equit
answer
total assets
question
relationship between assets and liabilities plus owners' equity
answer
fundamental accounting equation
question
economic resources obtained or controlled by the entity
answer
Assets
question
financing sources for those resources or assets
answer
Liabilities and owners' equity
question
formalizes the idea that there are two sides to every accounting transaction
answer
dual-aspect concept
question
every accounting transaction has two sides which must be recorded
answer
dual-aspect concept
question
It requires that transactions be recorded in terms of their actual price or cost at the time the transaction occurred.
answer
historical cost concept (cost concept)
question
relevance
answer
market cost
question
reliability
answer
historical cost
Get an explanation on any task
Get unstuck with the help of our AI assistant in seconds
New