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Principles Of Accounting 1 (Exam 1) questions with right answers.
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Principles Of Accounting 1 (Exam 1)questions with right answers.
Accounting ANS - An information system that provides reports to stakeholders about the economic
activities and condition of a business.
Business Entity Concept ANS - A concept of accounting that limits the economic data in the accounting
system to data related directly to the activities of the business.
generally accepted accounting principles (GAAP) ANS - Generally accepted guidelines for the
preparation of financial statements. (In the USA)
Financial Accounting Standards Board (FASB) ANS - The authoritative body that has the primary
responsibility for developing accounting principles. (Sets the rules for GAAP)
Securities and Exchange Commission (SEC) ANS - An agency of the U.S. government that has authority
over the accounting and financial disclosures for companies whose shares of ownership (stock) are
traded and sold to the public.
International Accounting Standards Board (IASB) ANS - An organization that issues International
Financial Reporting Standards for many countries outside the United States.
International Financial Reporting Standards (IFRS) ANS - Emerged to reduce cross-country differences in
accounting standards, primarily in countries outside of North America.
Matching Concept ANS - A concept of accounting in which expenses are matched with the revenue
generated during a period by those expenses.
Cost Concept ANS - A concept of accounting that determines the amount initially entered into the
accounting records for purchases.
, Forms of Business Entities ANS - Proprietorship, Partnership, Corporation, and Limited Liability
Company
Revenue Recognition Concept ANS - The accounting concept that supports reporting revenues when the
services are provided to customers.
Accounting Equation ANS - Assets= Liabilities + Owner's Equity
Assets ANS - The resources owned by a business.
Liabilities ANS - The rights of creditors that represent debts of the business.
Owner's Equity ANS - The owner's right to the assets of the business.
Expenses ANS - Assets used up or services consumed in the process of generating revenues.
Revenues ANS - Increases in assets and owner's equity as a result of selling services or products to
customers
Net Income ANS - The amount by which revenues exceed expenses.
Net Loss ANS - The amount by which expenses exceed revenues.
Income Statement ANS - A summary of the revenue and expenses for a specific period of time, such as a
month or a year.
Statement of Owner's Equity ANS - A summary of the changes in owner's equity that have occurred
during a specific period of time, such as a month or a year.
Balance Sheet ANS - A list of the assets, liabilities, and owner's equity as of a specific date, usually at the
close of the last day of a month or a year.
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