ACG 2021 Exam 1 QUESTIONS AND ANSWERS

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ACG 2021 Exam 1 Balance Sheet Correct Answer: a financial statement that reports the assets and claims to those assets at a specific point in time Basic accounting equation Correct Answer: Ass... ets= Liabilities + Equity Common Stock Correct Answer: the total amount paid in by stockholders for the shares they purchase Corporation Correct Answer: a business organized as a separate legal entity having ownership divided into transferable shares of stock Dividends Correct Answer: payments of cash from a corporation to its stockholders Expenses Correct Answer: the cost of assets consumed or services used in the process of generating revenues income statement Correct Answer: a financial statement that presents the revenues and expenses and resulting net income or net loss of a company for a specific period of time liabilities Correct Answer: the debts and obligations of a business. Liabilities represent the amounts owed to creditors net income Correct Answer: the amount by which revenues exceed expenses net loss Correct Answer: the amount by which expenses exceed revenues partnership Correct Answer: a business owned by two or more persons associated as partners retained earnings Correct Answer: the amount of net income retained in the corporation retained earnings statement Correct Answer: a financial statement that summarizes the amounts and causes of changes in retained earnings for a specific period of time revenue Correct Answer: the increase in assets that result from the sale of a product or service in the normal course of business sole proprietorship Correct Answer: a business owned by one person statement of cash flows Correct Answer: a financial statement that provides financial information about the cash receipts and cash payments of a business for a specific period of time stockholder's equity Correct Answer: the owners' claim on total assets Classified Balance sheet Correct Answer: a balance sheet that contains a number of standard classifications and sections Conservatism Correct Answer: the approach of choosing an accounting method, when alternatives exist, that will least likely overstate assets and net income consistency Correct Answer: use of the same accounting principles and methods from year to year within a company cost principle Correct Answer: an accounting principle that states that companies should record assets at their costs current assets Correct Answer: cash and other resources that companies reasonably expect to convert to cash or use up within one year or the operating cycle, whichever is longer current liabilities Correct Answer: obligations that a company reasonably expects to pay within the next year or operating cycle, whichever is longer Financial Accounting Standards Board (FASB) Correct Answer: the primary accounting standard-setting body in the US free cash flow Correct Answer: cash remaining from operating activities after adjusting for capital expenditures and dividends paid full disclosure principle Correct Answer: accounting principle that dictates that companies disclose circumstances and events that make a difference to financial statement users Generally accepted accounting principles (GAAP) Correct Answer: a set of rules and practices, having substantial authoritative support, that the accounting profession recognizes as a general guide for financial reporting purposes intangible assets Correct Answer: assets that do not have physical substance Ex: patents, goodwill International accounting standards board (IASB) Correct Answer: an accounting standard-setting body that issues standards adopted by many countries outside of the US liquidity Correct Answer: the ability of a company to pay obligations that are expected to become due within the next year or operating cycle long-term investments Correct Answer: generally, (1) investments in stocks and bonds of other corporations that companies hold for more than one year, and (2) long-term assets, such as land and buildings, not currently being used in the company's operations Long-term liabilities Correct Answer: aka long term debt obligations that a company expects to pay after one year operating cycle Correct Answer: the average time required to go from cash to cash in producing revenues Property, plant, and equipment Correct Answer: PPE assets with relatively long useful lives that companies use in operating the business and are not intended for resale Securities and Exchange Commission (SEC) Correct Answer: the agency of the US government that oversees US financial markets and accounting standard-setting bodies Solvency Correct Answer: the ability of a company to pay interest as it comes due and to repay the balance of debt at its maturity Statement of Stockholders' equity Correct Answer: a financial statement that presents the factors that caused stockholders' equity to change during the period, including those that caused retained earnings to change working capital Correct Answer: the difference between the amounts of current assets and current liabilities accounting transactions Correct Answer: events that require recording in the financial statements because they affect assets, liabilities, or stockholders' equity credit Correct Answer: the right side of the account debit Correct Answer: the left side of the account general ledger Correct Answer: a ledger that contains all asset, liability, stockholders' equity, revenue, and expense accounts journal Correct Answer: an accounting record in which transactions are initially recorded in chronological order ledger Correct Answer: group of accounts maintained by a company posting Correct Answer: the procedure of transferring journal entries to the ledger accounts trial balance Correct Answer: a list of accounts and their balances at a given time [Show More]

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