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: Assets= Liabilities + E
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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: Assets= 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
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