Term
| the record where increases and decreases in each accounting equation element is shown |
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Definition
|
|
Term
| three parts of an account |
|
Definition
1. Title
2. Space for recording increases in the amount of the element
3. Space for recording decreases in the amount of the element |
|
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Term
|
Definition
|
|
Term
|
Definition
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Term
| Amounts entered on the left side of an account are ____ |
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Definition
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|
Term
TRUE OR FALSE
amounts entered on the right side of an account are credits |
|
Definition
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|
Term
TRUE OR FALSE:
T accounts are often used in business to explain transactions because they are simple. |
|
Definition
|
|
Term
| a group of accounts for a business entity |
|
Definition
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|
Term
| list of accounts in the ledger |
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Definition
|
|
Term
| Resources owner by the business entity |
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Definition
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|
Term
| debts owed to outsiders (creditors |
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Definition
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|
Term
| Often identified on the balance sheet by titles that include payable |
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Definition
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|
Term
| Cash is received before services are delivered to the customer creates a liability to perform the services |
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Definition
|
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Term
| Is the owner’s rights to the assets of the business after all liabilities have been paid |
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Definition
|
|
Term
TRUE OR FALSE
For a proprietorship, the owner’s equity is represented by the balance of the owner’s drawing account. |
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Definition
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|
Term
| represents the amount of withdrawals made by the owner |
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Definition
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Term
| are increases in owner’s equity as a result of selling services or products to customers. |
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Definition
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|
Term
| result from using up assets or consuming services in the process of generating revenues |
|
Definition
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|
Term
| The ___ digit indicates the major account group of the ledger in which the account is located. |
|
Definition
|
|
Term
| The ____ digit indicates the location of the account within its group |
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Definition
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|
Term
true or fa;se
Every business transaction to be recorded in at least two accounts |
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Definition
|
|
Term
| serves as a record of when transactions occurred and were recorded |
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Definition
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Term
| the process of recording a transaction in the journal |
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Definition
|
|
Term
| process of transferring the debits and credits from the journal entries to the accounts |
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Definition
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Term
| is a financial report showing the closing balances of all accounts in the general ledger at a point in time. |
|
Definition
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|
Term
| occurs when the order of the debits is copied incorrectly, such as writing 542 as 452 or 524 |
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Definition
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Term
| the entre number is copied incorrectly one or more spaces to the right or the left, such as writing 542 as 54.2 or 5420. |
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Definition
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Term
An account receivable is a claim against a customer arising from a sale on account.
True
False |
|
Definition
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|
Term
A retained earnings statement reports all changes in cash for a period of time.
True
False |
|
Definition
|
|
Term
Two factors that typically lead to ethical violations are relevance and timeliness of accounting information.
True
False |
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Definition
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|
Term
The balance sheet represents the accounting equation.
True
False |
|
Definition
|
|
Term
The primary role of accounting is to determine the amount of taxes a business will be required to pay to taxing entities.
True
False |
|
Definition
|
|
Term
An example of an external user of accounting information is the federal government.
True
False |
|
Definition
|
|
Term
Proprietorships are owned by two or more individuals and provide only services to their customers.
True
False |
|
Definition
|
|
Term
No significant differences exist between the accounting standards issued by the FASB and the IASB.
True
False |
|
Definition
|
|
Term
Denzel Jones is the major stockholder of Crystal Cleaning Company. Recently, Denzel received $10,000 of dividends from Crystal Cleaning. After receiving the dividends, he contributed $6,000, in his name, to Habitat for Humanity.
The contribution of $6,000 should be recorded on the accounting records of which of the following entities?
A. Denzel Jones' personal records and Habitat for Humanity
B. Crystal Cleaning and Habitat for Humanity
C. Denzel Jones’ personal records and Crystal Cleaning
D. Denzel Jones’ personal records, Crystal Cleaning, and Habitat for Humanity |
|
Definition
A. Denzel Jones' personal records and Habitat for Humanity |
|
|
Term
Which of the following concepts relate to separating the reporting of business and personal economic transactions?
A. cost concept
B. objectivity concept
C. unit of measure concept
D. business entity concept |
|
Definition
| D. business entity concept |
|
|
Term
Which of the following groups are considered to be internal users of accounting information?
A. Employees and customers
B. Employees and managers
C. Government and banks
D. Customers and vendors |
|
Definition
| B. Employees and managers |
|
|
Term
Cash investments made by stockholders in exchange for capital stock in a business are reported on the statement of cash flows in the
A. supplemental statement
B. operating activities section
C. financing activities section
D. investing activities section |
|
Definition
C. financing activities section |
|
|
Term
Two common areas of accounting that respectively provide information to internal and external users are
A. managerial accounting and financial accounting
B. financial accounting and tax accounting systems
C. forensic accounting and financial accounting
D. managerial accounting and environmental accounting |
|
Definition
A. managerial accounting and financial accounting |
|
|
Term
A financial statement user would determine if a company was profitable or not during a specific period of time by reviewing
A. the income statement
B. the balance sheet
C. the statement of cash flows
D. the retained earnings statement |
|
Definition
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Term
Which of the following group of companies are all examples of a merchandising business?
A. GameStop, Best Buy, Gap
B. Delta Airlines, Marriott, Gap
C. GameStop, Sony, Dell
D. Gap, Amazon, NIKE |
|
Definition
A. GameStop, Best Buy, Gap |
|
|
Term
Most businesses in the United States are
A. proprietorships
B. partnerships
C. limited liability companies
D. corporations |
|
Definition
|
|
Term
Which of the following would not normally operate as a service business?
A. pet groomer
B. supermarket
C. lawn care company
D. styling salon |
|
Definition
|
|
Term
The objectivity concept requires that
A. the Financial Accounting Standards Board must be fair and unbiased in its deliberations over new
accounting standards
B. amounts recorded in the financial statements must be based on independently verifiable evidence
C. business transactions must be consistent with the objectives of the entity
D. accounting principles must meet the objectives of the Security and Exchange Commission |
|
Definition
| B. amounts recorded in the financial statements must be based on independently verifiable evidence |
|
|
Term
How does receiving a bill to be paid next month for services received affect the accounting equation?
A. assets increase; liabilities increase
B. liabilities increase; stockholders’ equity decreases
C. assets decrease; stockholders’ equity decreases
D. liabilities increase; stockholders’ equity increases |
|
Definition
| B. liabilities increase; stockholders’ equity decreases |
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|
Term
If total liabilities decreased by $46,000 during a period of time and stockholders’ equity increased by $60,000 during the same period, the amount and direction (increase or decrease) of the period's change in total assets is
A. $106,000 decrease
B. $14,000 decrease
C. $106,000 increase
D. $14,000 increase |
|
Definition
D. $14,000 increase
stockholders’ equity increase by (+$60,000) - liabilities decreased by (-$46,000) = $14,000 increase |
|
|
Term
Which of the following is a manufacturing business?
A. Amazon.com.
B. Wal-Mart.
C. Ford Motors.
D. Delta Airlines |
|
Definition
|
|
Term
How does paying a liability in cash affect the accounting equation?
A. liabilities decrease; stockholders’ equity increases
B. assets decrease; liabilities decrease
C. assets increase; liabilities decrease
D. assets increase; liabilities increase |
|
Definition
| B. assets decrease; liabilities decrease |
|
|
Term
Only large companies such as Wal-Mart, JCP, General Motors, and the Bank of America can be organized as corporations.
True
False |
|
Definition
|
|
Term
Some of the major fraudulent acts by senior executives started as what they considered to be small ethical lapses which grew out of control.
True
False |
|
Definition
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|
Term
Expenses are assets that are used up during the process of earning revenue.
True
False |
|
Definition
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|
Term
If a building is appraised for $85,000, offered for sale at $90,000, and the buyer pays $80,000 cash for it, then the buyer would record the building at $85,000.
True
False |
|
Definition
|
|
Term
________ businesses sell products they purchase from other businesses to customers.
Example:
Walmart (general merchandise)
Amazon.com (Internet books, music, videos) |
|
Definition
|
|
Term
_________ businesses change basic inputs into products that are sold to customers.
Example:
Ford Motor Co. (cars, trucks, vans)
Dell, Inc. (personal computers) |
|
Definition
|
|
Term
_________ businesses provide services rather than products to customers.
Example:
Delta Air Lines (transportation services)
The Walt Disney Company (entertainment services) |
|
Definition
|
|
Term
A _______ is a form of business entity that is owned by one
individual. |
|
Definition
|
|
Term
A _______ is a form of business entity that is owned by two or more individuals. |
|
Definition
|
|
Term
A _______ is a form of business entity that is organized under state or federal statutes as a separate legal taxable entity. |
|
Definition
|
|
Term
A _____ is a form entity that combines the attributes of a partnership and a corporation. |
|
Definition
| Limited Liability Company (LLC) |
|
|
Term
| there is an accounts payable in the cash basis of accounting |
|
Definition
| false; di sila mo recognize |
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|
Term
true or false:
Under the cash basis accounting method, a company accounts for revenue only when it receives payment for the products or service it provided a customer. |
|
Definition
|
|
Term
| is an accounting method where revenue or expenses are recorded when a transaction occurs vs. when payment is received or made |
|
Definition
| Accrual Basis of Accounting |
|
|
Term
| this is a method which says that revenues and expenses should be recognized in the same period |
|
Definition
| matching concept or matching principle |
|
|
Term
| this principle requires that revenues are recognized when realized and earned–not when cash is received. |
|
Definition
| Revenue Recognition Concept |
|
|
Term
| The accounting concept supporting reporting revenues and related expenses in the same period |
|
Definition
|
|
Term
| revenues and expenses are reported on the income statement in the period in which cash is received or paid. |
|
Definition
|
|
Term
| what is the net income formula for the cash basis of accounting? |
|
Definition
| NET INCOME = Cash Receipts – Cash Payments |
|
|
Term
| Accounts on the Balance Sheet require updating for the following reasons: |
|
Definition
1Some expenses are not recorded daily
2Some revenues and expenses are incurred as time passes rather than as separate transactions
3Some revenues and expenses may be unrecorded |
|
|
Term
t or f
Every adjusting entry affects at least one owner's equity account and one balance sheet account. |
|
Definition
|
|
Term
T OR F
adjusting entries will not need cash |
|
Definition
|
|
Term
| Adjusting entries between balance sheet accounts only, or between income statement accounts only, are usually called _______ |
|
Definition
|
|
Term
| Are the advance payment of future expenses and are recorded as assets when cash is paid |
|
Definition
|
|
Term
| are initially recorded as assets, but their value is expensed over time onto the income statement as an expense. |
|
Definition
|
|
Term
| • is the total amount of depreciation expense that has been allocated for an asset since the asset was put into use |
|
Definition
|
|
Term
| the value of an asset carried on the balance sheet |
|
Definition
|
|
Term
t or f
the market value of a fixed asset usually differs from its book value |
|
Definition
|
|
Term
| • Verifies the equality of the total debit and credit balances before the financial statements are prepared |
|
Definition
|
|
Term
| resources owned by a business (EX: cash, supplies, land) |
|
Definition
|
|
Term
TRUE OR FALSE:
Liabilities are shown before owner’s equity because they have first rights to the assets |
|
Definition
|
|
Term
| An economic event or condition that directly changes an entity’s financial condition or its results of operations |
|
Definition
|
|
Term
| serves as the basic foundation for the accounting systems of all companies. |
|
Definition
|
|
Term
| An economic event or condition that directly changes an entity’s financial condition or its results of operations |
|
Definition
|
|
Term
T OR F:
A change in a business’ credit rating directly affectS cash or any other asset, liability, or owner’s equity amount |
|
Definition
| fALSE; IT DOES NOT DIRECTLY AFFECT |
|
|
Term
TRUE OR FALSE:
Most business transactions can be stated in terms of changes in the elements of the accounting equation |
|
Definition
|
|
Term
T OR F:
The owner’s personal assets should be excluded from the balance sheet |
|
Definition
|
|
Term
| new amounts; amount present in the financial repository |
|
Definition
|
|
Term
| a transaction where you purchase stuff and agree to pay it in the future |
|
Definition
|
|
Term
| the liability created by a purchase on account |
|
Definition
|
|
Term
| items such as supplies that will be used in the business in the future (are assets) |
|
Definition
|
|
Term
| are short term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value. |
|
Definition
|
|
Term
| Is an asset on a balance sheet that results from a business making advanced payments for goods or services to be received in the future. |
|
Definition
|
|
Term
| money earned for rendering products/services to its customers |
|
Definition
|
|
Term
T OR F
revenue is expenses generated from normal business operations |
|
Definition
|
|
Term
| revenue from providing services |
|
Definition
|
|
Term
| revenue from the sale of merchandise |
|
Definition
|
|
Term
|
Definition
|
|
Term
| is generated from a company's core business operations, and is typically the area where a company earns most of its income. |
|
Definition
|
|
Term
| Reports a company’s cash inflows and outflows for a period |
|
Definition
|
|
Term
| Are the cash flows from transactions that affect the net income of the company |
|
Definition
| cash flows from operating activities |
|
|
Term
| Are the cash flows from transactions that affect investments in the noncurrent assets of the company |
|
Definition
| cash flows from investing activities |
|
|
Term
| Are the cash flows from transactions that affect the debt and equity of the company |
|
Definition
| cash flows from financing activities |
|
|
Term
true or false:
The ending cash on the statement of cash flows is less than the cash reported on the company’s balance sheet at the end of the accounting period |
|
Definition
false; they are equal
The ending cash on the statement of cash flows EQUALS the cash reported on the company’s balance sheet at the end of the accounting period |
|
|
Term
| happens when a source of cash causes the cash flow to increase |
|
Definition
|
|
Term
| happens when a use of cash causes the cash flow to decrease |
|
Definition
|
|
Term
identify what kind of cash flow statement under:
Cash receipts from payment of accounts receivable |
|
Definition
|
|
Term
identify what kind of cash flow statement under:
Cash payments for purchase of noncurrent assets |
|
Definition
|
|
Term
identify what kind of cash flow statement under:
Cash payments for treasury stock, dividends, and redemption of debt securities |
|
Definition
|
|
Term
identify what kind of cash flow statement under:
Cash receipts from issuing equity and debt securities |
|
Definition
|
|
Term
identify what kind of cash flow statement under:
cash payment from purchase of prepaid insurance |
|
Definition
|
|
Term
| • indicates the amount of money a company brings in from its ongoing, regular business activities, such as manufacturing and selling goods or providing a service to customers. It is the first section depicted on a company's cash flow statement. |
|
Definition
| cash flow from operating activities |
|
|
Term
| this method of reporting cash flow from operating activities identifies changes in cash receipts and payments reported in a cash flow statement |
|
Definition
|
|
Term
| what is the net cash flow from operating activities |
|
Definition
| Cash received from operating activities LESS cash payments for operating activities |
|
|
Term
| this method of reporting cash flows from operating activities Reports cash flows from operating activities by beginning with net income and adjusting it for revenues and expenses that do not involve the receipt or payment of cash |
|
Definition
|
|
Term
true or false
the direct method Shows how net income is related to the ending cash balance that is reported on the balance sheet |
|
Definition
| false; indirect method na |
|
|
Term
| shows the cash inflows and outflows related to changes in a company’s long term assets |
|
Definition
| cash flow from investing activities |
|
|
Term
| selling fixed assets, investments, and intangible assets will give cash INFLOW OR OUTFLOW? |
|
Definition
| inflow for investing ctivities |
|
|
Term
| Shows cash inflows and cash outflows related to changes in a company’s long term liabilities and stockholder’s equity |
|
Definition
| cash flow from financing activities |
|
|
Term
| ISSUING LONG-TERM DEBT OR EQUITY SERVICES such as bonds, notes payable, preferred stock, and common stock will give CASH INFLOW OR OUTFLOW |
|
Definition
|
|
Term
| Normally computed as cash flow from operations per share |
|
Definition
|
|
Term
| this method of reporting cash flows from operating activities - Uses the logic that a change in any balance sheet account (including cash) can be analyzed in terms of changes in the other balance sheet accounts |
|
Definition
|
|
Term
| THE NEW ACCOUNTING EQUATION THAT CAN BE USED TO SOLVE FOR CASH: |
|
Definition
| Cash = Liabilities + Stockholder’s Equity – Noncash Assets |
|
|
Term
| ___ is the first amount reported on the statement of cash flows. |
|
Definition
|
|
Term
| earnings are the amount of profit a company has left over after paying all its direct costs, indirect costs, income taxes and its dividends to shareholders. |
|
Definition
|
|
Term
identify if ma subtract or add (indirect method)
Increases in accounts receivable |
|
Definition
|
|
Term
identify if ma subtract or add (indirect)
Depreciation/amortization |
|
Definition
|
|
Term
identify if ma subtract or add (indirect)
Increases in short-term investments |
|
Definition
|
|
Term
identify if ma subtract or add (indirect)
Decreases in noncash current operating assets |
|
Definition
|
|
Term
identify if ma subtract or add
Gains on disposal of assets |
|
Definition
|
|
Term
identify if ma subtract or add
Losses on disposal of assets |
|
Definition
|
|
Term
identify if ma subtract or add (indirect)
Increases in noncash current operating assets |
|
Definition
|
|
Term
identify if ma subtract or add (indirect)
Increases in current operating liabilities |
|
Definition
|
|
Term
identify if ma subtract or add (indirect)
Decreases in current operating liabilities |
|
Definition
|
|
Term
| Measures the operating cash flow available to a company to use after purchasing the property, plant, and equipment (PP&E) necessary to maintain current productive capacity |
|
Definition
|
|
Term
t or f
A company that has free cash flow is able to fund internal growth, retire debt, pay dividends, and benefit from financial flexibility |
|
Definition
|
|
Term
t or f
A company with NO free cash flow is able to maintain current productive capacity |
|
Definition
|
|
Term
| number of goods the company is currently producing/selling |
|
Definition
|
|
Term
what type of activity
redemption of bonds |
|
Definition
|
|
Term
t or f
The redemption of bonds payable refers to the repurchase of bonds by their issuer. |
|
Definition
|
|
Term
identify if ma subtract or add (direct) and unsa na acc ang addan or subtractan
increase in prepaid expense |
|
Definition
| add to operating expenses |
|
|
Term
| The interest paid on a note payable is reported in the section of the cash flow statement entitled cash flows from ___activities. |
|
Definition
|
|
Term
t or f
Cash deposited into bank will result into a no flow of cash |
|
Definition
| true, as it is simply a movement between item of cash and cash equivalent. |
|
|
Term
Which of the following statements are false?
A) Cash Flow Statement is helpful in the formation of policies.
B) Cash Flow Statement is useful for external analysis
C) Cash Flow Statement is helpful in estimating future cash flow |
|
Definition
|
|
Term
| Dividend received by the financing company is classified under ______ activity |
|
Definition
|
|
Term
| Rent received by a financing company is classified under _____ activity |
|
Definition
|
|
Term
| are the portion of a company's shares that are held by its treasury and not available to the public. |
|
Definition
|
|
Term
t or f
preferred stock are stocks repurchased by the company from the public float |
|
Definition
|
|
Term
identify unsa na activity ang ma affectan
gains on sale of land |
|
Definition
| operating (kay maka ano nis net income) |
|
|
Term
identify if ma subtract or add (direct) and unsa na acc ang addan or subtractan
decrease in deferred income |
|
Definition
| subtract from sales kay naka earn nakas imo revenue so makapataas nas income statement nya wa ka kakuhag cash |
|
|
Term
t or f
When deferred revenue increases, the increase results in a cash outflow |
|
Definition
|
|
Term
|
Definition
Cash flow from Operating Activities
LESS: Investments in PP&E needed to maintain current production |
|
|
Term
| US GAAP reports interest paid or received as a ___ expense |
|
Definition
|
|
Term
identify if ma subtract or add (direct) and unsa na acc ang addan or subtractan
increase in prepaid expense |
|
Definition
|
|
Term
| what is another name for deferred revenue |
|
Definition
|
|
Term
t or f
if your accounts payable increased, you had less cash payments so imong i-add back sa net income |
|
Definition
|
|
Term
t or f
The direct cash flow method starts with cash transactions such as cash received and cash paid while ignoring the non-cash transactions. |
|
Definition
|
|
