Accounting 101 Final Study guide Latest Update 2024 Already Passed
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Course
Accounting 101 Fnal
Institution
Accounting 101 Fnal
Accounting 101 Final Study guide Latest Update 2024 Already Passed
Know the 3 forms of business entities - Answers Sole proprietorship- A single owner
Partnership- has two or more parties as co-owners each is an owner
Corporation- Owned by stockholders, or shareholders, who own stock representi...
Operating: loans, pay dividends, repurchase its own stock, selling
The International Accounting Standards Board is responsible for developing a single set of worldwide
accountings standards (IFRS) - Answers ...
These standards will help companies to reduce accounting costs, make it easier to acquire foreign
companies, and facilitate comparisons between foreign companies. - Answers IFRS- International
Accounting Standards Board
Know the primary objective of financial reporting - Answers Provide financial information about the
reporting entity that is useful to existing and potential investors, lenders, and other creditors in making
decision.
, What makes information relevant? - Answers Comparability, verifiability, timeliness, and
understandability.
It must be capable of making a difference to the decision maker, having predictive or confirming value. It
must be material, which means it must be important enough to the informed user.
Financial information should be understandable to whom - Answers Existing and potential investors,
lenders and other creditors, those willing to spend the necessary time to understand it.
Balance Sheet - Answers lists assets, liabilities and owners' equity
Tells what obligations will be due in the future
Income Statement - Answers revenues minus expenses equal net income
Summarizes results, operations for a period of time
Net Income = - Answers Revenues - Expenses
Single most important item on financial statement
Assets are recorded at historical/original cost because - Answers it is objective and verifiable
Review various source documents. Source documents indicate a transaction has occurred. Ex: Invoice,
check, time card, shipping/receiving documents. - Answers A piece of paper that has been used to
record a transaction
Owner invests in business - Answers Cash increases, Stockholders equity (common stock) increases
Purchases supplies for cash - Answers Cash Decreases, Supplies increase
Earn a revenue and receive a promise of cash at a later date - Answers Accounts receivable increases,
retained earnings increase
Left Side - Answers Debit
Right Side - Answers Credit
Initial recording of transaction is made in a journal/general journal (called journal entry, journalizing). -
Answers The entry is then posted to ledger/general ledger.
Know what is meant by a double-entry accounting system - Answers Accounting records the dual effects
on the entity. Each transaction affects at least two accounts.
You give something, you receive something in return.
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