Accoutning Test 1

  1. What are the steps in the accounting process?
    • 1) identification
    • 2) recording
    • 3) communicating
  2. What does the cost principle state?
    assets should be recorded at cost
  3. What are the two main accouting assumptions?
    • 1) monetary unit assumotion
    • 2) economic entity assumption
  4. Monetary Unit Assumption
    include in the accounting records inly transaction data that can be expressed in money terms
  5. Economic Entity Assumption
    the activities of the entity be kept separate and distinct from the activities of its owner and all other economic entities
  6. Propietorship
    buisness owened by one person small amount of money to start owner recieves and profits suffers any losses and is personally liable for all debts of the business
  7. the three tyoes if buiness entities are?
    • 1) preoprietorships
    • 2) partnership
    • 3) corporation
  8. net income results when?
    revenues exceed expenses
  9. performing services on account will have the folling effect on the components of the basic accounting equation
    increase assets and incres oe
  10. paymnet of accounts payable affects the compnents of the accounting equation how?
    decreses assets and decreases liabilities
  11. income statement
    presents revenues and expenses and resulting net income or net loss for a specific period of time
  12. oe statement
    summaries the changes in oe for a specific period of time
  13. balence sheet
    reports the assets, liabilities, and oe at a specific date
  14. statement of cash flow
    summaries information about the cash inflow and outflows for a specific period of time
  15. services provided by a public accoutant include what?
    • 1) auditing
    • 2) taxation
    • 3) management consulting
  16. indentify
    company selects the events relevant to its business
  17. records
    keeping a systematic chronological dairy of events measured in dollars and cents
  18. communicates
    accounting reports
  19. what are the steps to analyzing ethics
    • 1) recognize an ethical situation and ethical issues involved
    • 2) identify and analzye the principle elements in the situation
    • 3) Identify the alternatives and weigh the impact of each alternative on various stakeholders
  20. Expenses that result from operating the business are decreases in oe
  21. which is the only statement for a specific date?
    balance sheet
  22. auditing
    certified public account examines company financial statements and provides an opinion as to how accurately the financial statement presents the company's results and financial position
  23. taxation
    tax advice and planning preparing tax returns and representing clients before governmental agencies
  24. management consulting
    installing basic accounting software or highly complex systems providing support for major marketing project
  25. private consulting
    • cost accounting
    • budgeting
    • accounting information system design and support
    • tax planning and preparation
  26. cost accounting
    finding the cost of producing speciic products
  27. forensic accounting
    uses accounting auditing and investigative skills to conduct invetigatations into theft and fraud
  28. bookkeeping as opposed to accounting usually involves only?
  29. the primary accounting standard-setting body in the US is the?
    Financial Accoutning Standard Board
  30. Combining the activities of Kellogg and General Mills would violate the ?
    Economic Entity Assumption
  31. The resources a business owns are called what?
  32. revenues and expenses are reported on which statement?
    income statement
  33. the ending oe amount is shown where?
    both the balance sheet and the oe statement
  34. careers in accounting
    • 1) public
    • 2) governemental
    • 3) private
  35. net income =
  36. account
    a record of increases and decreases in a specific asst liability or oe item
  37. debit
    increase assts and the decrease liabilities
  38. what is the normal balance for a revenue account?
  39. accoutns that normally have a debit balance are?
    • 1) assets
    • 2) oe
    • 3) expenses
  40. what is the expanded accounting equation?
  41. what are the 3 masic steps in the recording process?
    • 1) analyze each transaction for its effects on the account
    • 2) enter the transaction information in a journal
    • 3) transfer the journal information to the appropriate accounts in the ledge-Post
  42. what does the journal do for the recording process?
    • 1) discloses in one place the complete efffects of a transaction
    • 2) it provides a chronlogical record of transactions
    • 3) helps prevents of locate errors because the debit and credit amounts for each entry can be easily compared
  43. the purchase of supplies on account should result
    a debit to supplies and a credit to accounts payable
  44. what is the order of accounts in a ledger?
    assets, liabilities, oc, od, rev, exp
  45. ledgeer
    a collection of the entire group of account maintained by a company
  46. posting
    transfer journal entries to ledger accounts
  47. trail balance
    is a list of accounts with their balance at a given time
  48. the normal balance of an account is on the side where a decrease in the account is recorded
  49. how do companies initally record transactions in the genreal journel
  50. a credit to a liability account indicates a
    increase in the liability
  51. what is the normal balance for an asst account?
  52. what is the normal balance for a drawing accoutn
  53. wht is the normal balance for an oc account
  54. what is the normal balance for the liability account?
  55. what is the normal balance for the od account?
  56. what is the normal balance for an expenses account?
  57. what is the normal balance for a revenue account?
  58. entering transaction data in the jornal is known as
  59. a list of accounts and their balances at a given point in time it called?
    trail balance
  60. whare are dollar-signs typically only used?
    trail balance and financial statement
  61. what are the steps for preparing a trail balance?
    • 1) list the account titles and their balances in the appropriate debit or crdeit column
    • 2) total the debit and credit columns
    • 3) prove the equality of the two columns
  62. what is the primary purpose of a trail balance?
    prove that the debits equal the credit after posting
  63. unearned rev is a
Card Set
Accoutning Test 1
chapter 1,2,3