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Accounting Exam 1

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Account Balance Difference between total debits and total credits (including the beginning balance) for an account. Accounting comprehensive system for collecting, analyzing, and communicating financial information Accounting Cycle for a given time period, the cycle of recording accounting data, adjusting the accounts, preparing the financial statements, and closing the temporary accounts; when one accounting cycle ends a new one begins Accounting Event Economic occurrence that changes a company's assets, liabilities, or equity Accounting Period Time span covered by the financial statements; normally one year, but may be a quarter, month or some other time interval Accrual Accounting recognition of revenue or expense in a period before cash is exchanged Accrual Accounting Accounting system which recognizes revenues when earned and expenses when incurred regardless of when the related cash is exchanged Adverse Opinion Opinion issued by a certified public accountant that means one or more departures from GAAP in a company's financial statements are so very material the auditors believe the financial statements do not fairly represent the company's status Adjusting Entry Entry that updates account balances prior to preparing financial statements; a bookkeeping tool. Adjusting entries never affect the Cash account Allocations Recognizing expenses by systematically assigning the cost of an asset to periods of use American Institute of CPA's National association that serves the education and professional interests of member of the public accounting profession; membership is voluntary Annual Reports Document companies publish to provide information, including financial statements, to stockholders Asset Exchange Transaction A transaction that decreases one asset and increases another asset; total asset remain unchanged. Asset Source Transaction A transaction that increases both an asset and a claim on assets ; the three types of asset source transactions are aquisitions from owners (equity), borrowing from creditors (liabilities), or earnings from operations (revenues). Asset Use Transaction A transaction that decreases both an asset and a claim on assets; 3 types are distributions, liability payments, or expenses Asset Economic resource used to produce revenue which is expected to provide future benefit to the business Audits the verifying of facts or procedures Balance Sheet A financial statement that summarizes a company's assets, liabilities and shareholders' equity at a specific point in time.

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