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Accounting 2000, Test 1
Chapters 1, 2 and 4
125
Accounting
Undergraduate 1
02/25/2010

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Cards

Term
Financial Accounting
Definition
What type of accounting focuses on external reporting
Term
Creditor
Definition
Anyone to whom you owe money.
Term

1. Creditors

2. Investors and Advisors

3. The Government

Definition
Who does financial accounting report to? (3)
Term
Managerial Accounting
Definition
What type of accounting focuses on internal reporting?
Term

1. Reporting to Management

2. Budgeting

Definition
Managerial accounting reports to ________ and is used for _________.
Term
Taxation
Definition
What field of accounting includes taxes?
Term

1. Income

2. Excise

3. Property

4. Sales/Use

5. Estate/Death

Definition
What are the 5 different types of taxes?
Term

1. Corporate

2. Partnership

3. Individual Laws

Definition
What are the 3 types of income taxes?
Term

1. Gas

2. Alcohol

3. Tobacco

Definition
What are 3 examples of things taxed by the government in what is known as an excise tax?
Term
Internal Auditing
Definition
Type of auditing done by someone who works for the company they are auditing.
Term
Internal Auditors
Definition
Which type of auditor finds ways to make a company they are auditing more efficient?
Term
External Auditing
Definition
Type of auditing done by CPA firms hired by comapnies.
Term
External Auditor
Definition
Type of auditor hired by a company to review accounting records.
Term
Internal and External
Definition
The two sub-parts of auditing.
Term
Not-for-Profit Accounting
Definition
Type of accounting used by charities, government, or any group or organization that is not for profit.
Term
Generally Accepted Accounting Principles
Definition
GAAP stands for?
Term
Assets
Definition
Classification for things with probably future economic benefits or that provide money.
Term
Assets
Definition
Money in the bank, land, merchandise, inventory, and investments are examples of?
Term
Historical Cost Principle
Definition
Principle that states that assets must be reported in a financial statement called a balance sheet at their original cost.
Term
Economic Entity Concept
Definition
The idea that a businesses account records should be separate from it's owners personal account records.
Term
Stable Dollar Assumption
Definition
The term used for ignorning inflation.
Term
Conservatism Principle
Definition
Principle that states that alternatives which are least likely to overstate assets and profits should be used.
Term
Materiality
Definition
Another word for the significance of something.
Term
Quantitative Aspect
Definition
Aspect of materiality that deals with the relative dollar amount/size of something.
Term
Qualitative Aspect
Definition
Aspect of materiality that deals with the relative importance of an item/event.
Term
Quantitative Aspect
Definition
Real estate, buildings, cars, furniture falls in the quantitative or qualitative aspect when dealing with materiality?
Term
Qualitative
Definition
An employee strike or law suit falls in the quantitative or qualitative aspect when dealing with materiality?
Term
3 and 6
Definition

Which two of these would not be reported?

1. An employee strike

2. Law suit

3. Small fire in janitor closet

4. Real estate

5. Buildings

6. Stapler

7. Cars

8. Furniture

Term
Going Concern Assumption
Definition
The assumption that all business entities we account for will have indefinite lives (profitable in the long run).
Term
Consistency Principle
Definition
Principle that states that companies use the same accounting method from year to year as to compare one year to another.
Term
Full Disclosure Principle
Definition
Principle that states that any data which influences the user of that data's decision then it should be disclosed.
Term
Parenthetically Documented; Footnotes (narrative form)
Definition
Two ways to make sure buisness decision influencing data is included which does not fall under other categories.
Term
Periodicity (Time Period Assumption)
Definition
This assumption states that we can divide time into reporting intervals at a minimum of one year.
Term
Quarterly
Definition
Concerning periodicity, franchise laws call for _____ reporting intervals.
Term
Fiscal Year
Definition
Any accounting period of 12 months.
Term
Financial Accounting Standards Board
Definition
FASB stands for?
Term
FASB
Definition
Who issues new GAAP (General Accepted Accounting Principles) and is not government affiliated?
Term
Seven member board and staff.
Definition
FASB contains ___ members and ____.
Term
International Revenue Service
Definition
IRS stands for?
Term
IRS
Definition
Who collects tax and enforces tax laws?
Term
American Institute of Certified Public Accountant
Definition
What does AICPA stand for?
Term
AICPA
Definition
This governing body of accountants administer the CPA exam and are responsible for CPE (continued professional education).
Term
Security and Exchange Commission
Definition
SEC stands for?
Term
SEC
Definition
This organization oversees stock exchanges.
Term

Income Statements

Balance Sheet

Statement of Cash Flow

Statement of Returned earnings

Definition
These four financial statements should be produced and included in companies yearly reports.
Term
Income Statement
Definition
Financial statement dealing with profit or loss; how successful were they?
Term
Balance Sheet
Definition
"Financial snapshot"; what the companies assets and liabilities are.
Term
Liability
Definition
Opposite of asset; financial obligations, debts, etc.
Term
Equity
Definition
Assets minus liabilities (shows whats left over).
Term
Statement of Cash Flow
Definition
Financial statement which covers where the company's cash came from and how it was used.
Term
Statement of Retained Earnings
Definition
Financial statement of the profits kept and their reinvestment (share with stock holders or reinvest in company).
Term

Name of Company

Title of Financial Report

Date relevant to the report

Definition
Three examples of every financial statement
Term
Revenues
Definition
The inflow of assets resulting from the sale of goods or performance of a service; also interest on investments.
Term
Revenue
Definition
On an income statement; total computer sales (selling price), consulting service, and investments are an example of _____.
Term
Expenses
Definition
On an income statement; total cost of goods sold, selling expenses, and general administration expenses (salaries, tax, etc.) are an example of _______.
Term
Net Income or Net Loss
Definition
Revenue total minus expenses total produces either _______ or _______.
Term
Profit
Definition
A the bottom of an income statement, $$ stands for ____.
Term
Loss
Definition
A the bottom of an income statement, ($$) stands for ____.
Term

1. The assets the company owns

2. Liabilities

3. Owners equity

Definition
These three things are the contents of a balance sheet in that order.
Term

1. Current

2. Property, Plant, Equipment

3. Other Assets

Definition
These three types of assets are listed on a balance sheet.
Term
Current Assets
Definition
All assets taht will be consumed within 12 months of the report.
Term

1. Cash

2. Temporary Investments

3. Accounts Receivable

4. Inventory

5. Prepaid Expenses

Definition
Five common "current" assets.
Term
Temporary Investments
Definition
Stocks, bonds, and mutual funds are an example of ______.
Term

1. Tangible

2. Have long lives

3. Used in daily operations

Definition
Property, Plant, and Equiment assets have these three things in common:
Term
Other Assets
Definition
All assets which are not current assets or PPE assets.
Term
Other Asset
Definition
A patent or copyright is an example of a/an _____ asset.
Term
Note Receivable
Definition
And "other" asset; loan given to a customer, money not yet received. (isn't required in 12 months)
Term
Current and Long-Term
Definition
Two types of liabilities.
Term
Current Liabilities
Definition
Any liabilities that must be satisfied/paid within 12 months of the given date.
Term
Current Liabilities
Definition
Accoutns payable, notes payable, accrued liabilities, and unearned revenue are examples of ______ liabilities.
Term
Accounts Payable
Definition
Bought goods or services in credit that still need to be paid.
Term
Notes Payable
Definition
Document you sign when you borrow money; money owed on a note that's due within 12 months of the balance date.
Term
Accrued Liabilities
Definition
An incurred expense taht has yet to be paid off (interest on loans).
Term
Unearned Revenue
Definition
Current liability; been paid in advance for goods/services.
Term
Long-term liabilities
Definition
Any liability due beyond 12 months of the balance date.
Term
Notes Payable
Definition
Money owed on a note that's due beyond 12 months of the balance date.
Term
Bonds Payable
Definition
Long term liability; money invested with 30 year terms.
Term
Long-term liabilities.
Definition
These are examples of long-term liabilities.
Term
Owners Equity
Definition
This liability is dependant on the form of the business.
Term
Sole Proprietorship
Definition
Form of business which is the easiest, inexpensive, and most common.
Term
Partnership
Definition
Form of business much like a sole proprietorship but with more than one owner.
Term
Corporations
Definition
Form of business; big business, have the benefit of "limited liability".
Term
LLC (Limited Liability Company)
Definition
Form of business with all the advantageous traits of the other three types rolled into one form of business.
Term
Owner's Equity
Definition
Common stock and retained earnings are examples of ______.
Term
Total Liabilities + Owners Equity
Definition
Total assets MUST equal ______ + ______ for the balance sheet to balance.
Term

1. Operating Activity

2. Investing Activities

3. Financing Activities

Definition
The three types of cash flows are:
Term
Operating Activity
Definition
Collections from customers (income) and payment of wages (outflow) are examples of this type of cash flow.
Term
Investing Activities
Definition
Stocks/bonds; property, plant and equipment (outflow); the sale of stock (inflow) are examples of this type of cash flow.
Term
Financing Activities
Definition
Issuing stocks/bonds/notes (inflow) and repayment of debts (outflow) are examples of this type of cash flow.
Term
Net Increase/Decrease of Cash
Definition
The total on a cash flow financial report consists of.
Term
Net Increase/Decrease
Definition
Comparing cash in the balance sheet from the beginning of the year to the amount of the cash you record at the end of the year will give you the _____________ of cash.
Term
Statement of Retained Earnings
Definition
This financial statment deals with adding income and subtracting dividends to the total value from the starting date of the financial statement.
Term
The Bookkeeping Process
Definition
This processes contains 11 steps; accounting cycle.
Term
Analyse the Transaction
Definition
The first step of the accounting cycle is to _________, which requires you to look at each transaction and determine which specific accounts were affected, which were increased or decreased?
Term

ASSETS - Company's cash increased by $10,000

OWNERS EQUITY - Commons stock increased by $10,000

Definition

If an owner invested $10,000 dollars in the company, what would the analysis of the transaction look like?

 

ASSETS - ?

OWNERS EQUITY- ?

Term

ASSETS - Company's cash decreased by $2000

EQUIPMENT - Company's equipment increased by $2000

Definition

If a company paid $2000 for a laptop, what would the analysis of the transaction look like?

 

ASSETS -

EQUIPMENT -

Term

ASSETS - Company's cash decreased by $5000

NOTE PAYABLE - Company's notes payable decreased by $5000

Definition

If a company paid $5000 principle to the bank, what would the analysis of the transaction look like?

 

ASSETS -

NOTE PAYABLE -

Term
Posting journal entries to "General Ledger"
Definition
The transfer of the journal entry to individual accounts to update account balances is known as.
Term
Trial Balance
Definition
A listing of all the accounts and debit or credit balances; looks like a balance sheet, but it's an internal document; used to prove that debits=credits.
Term
Prepare Journal Entries
Definition
Second step in the accounting cycle.
Term
Posting Journal Entries to the "General Ledger"
Definition
Third step to the accounting cycle.
Term
Prepare Trial Balance
Definition
Fourth step of the accounting cycle.
Term
Preparing Adjusting Journal Entries
Definition
Fifth step to the accounting cycle.
Term
Adjusting Journal Entries
Definition
AJE stands for?
Term

1. Depreciation

2. Accruals

3. Deferrals

Definition
Three things included in AJEs.
Term
Post the AJE's to the Journal Ledger
Definition
Sixth step to the accounting cycle.
Term
Prepare the Adjusted Trial Balance
Definition
Seventh step to the accounting process.
Term
Post AJE's to the Journal Ledger
Definition
This is done to update teh account balance; one of the accounting cycle steps.
Term
Adjusted Trial Balance
Definition
This is the same as a trial balance, but with the addition of AJE's.  Proves debits=credits.  Use to facilitate Financial Statement preparation.
Term
Prepare Financial Statements
Definition
Eigth step to the accounting cycle.
Term
Prepare Closing Journal Entries (CJE's)
Definition
Ninth step to the accounting cycle; closing out the prior period to start over again.
Term
Post CJE's to the General Ledger
Definition
Tenth step to the accounting cycle.
Term
Prepare a "post-closing" trial balance to prove debit=credit.
Definition
Eleventh step to the accounting cycle.
Term
1, 2, 5, and 8
Definition
The most important steps to the accounting cycle.
Term

1. Analysis of Transactions

2. Prepare Journal Entries

3. Posting Journal Entries to "General Ledger"

4. Prepare Trial Balance

5. Preparing Adjusting Journal Entries (AJE's)

6. Post the AJE's to the Journal Ledger

7. Prepare the Adjusted Trial Balance

8. Prepare Financial Statements

9. Prepare Closing Journal Entries

10. Post CJE's to the General Ledger

11. Prepare a "post-closing" trial balance to prove debit=credit.

Definition
Eleven steps to the accounting cycle.
Term
MUST; Debit
Definition
Dollar sum of credit ____ equal the dollar sum of _____.
Term
Debit
Definition
One credit account to one ____ account in every journal entry.
Term
DO NOT
Definition
Adjusted Journal Entries ________ have transactions as their source.
Term
DO
Definition
Journal entries ____ have a transaction as their source.
Term

1. Accruals

2. Deferrals

3. Depreciations

Definition
Three sources of AJEs.
Term
Accruals
Definition
Required by GAAP; the adding together of interest or different investments over a period of time
Term
"Accrual Basis"
Definition
This states to record revenue when earned regardless of when payment is received.
Term
Accrued Revenue
Definition
Type of revenue earned but not yet received.
Term
Debits Increase, Credits Decrease
Definition
In AJE's, Assets and Expenses do what in terms of debit and credit?
Term
Debits Decrease, Credits Increase
Definition
In AJE's: Liabilities, Revenues, and Owners Equity do what in terms of credit and debit?
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