Accoutning Test 1

What are the steps in the accounting process?

1) identification2) recording3) communicating

What does the cost principle state?

assets should be recorded at cost

What are the two main accouting assumptions?

1) monetary unit assumotion2) economic entity assumption

Monetary Unit Assumption

include in the accounting records inly transaction data that can be expressed in money terms

Economic Entity Assumption

the activities of the entity be kept separate and distinct from the activities of its owner and all other economic entities

Propietorship

buisness owened by one person small amount of money to start owner recieves and profits suffers any losses and is personally liable for all debts of the business

the three tyoes if buiness entities are?

1) preoprietorships2) partnership3) corporation

net income results when?

revenues exceed expenses

performing services on account will have the folling effect on the components of the basic accounting equation

increase assets and incres oe

paymnet of accounts payable affects the compnents of the accounting equation how?

decreses assets and decreases liabilities

income statement

presents revenues and expenses and resulting net income or net loss for a specific period of time

oe statement

summaries the changes in oe for a specific period of time

balence sheet

reports the assets, liabilities, and oe at a specific date

statement of cash flow

summaries information about the cash inflow and outflows for a specific period of time

services provided by a public accoutant include what?

1) auditing2) taxation3) management consulting

indentify

company selects the events relevant to its business

records

keeping a systematic chronological dairy of events measured in dollars and cents

communicates

accounting reports

what are the steps to analyzing ethics

1) recognize an ethical situation and ethical issues involved2) identify and analzye the principle elements in the situation3) Identify the alternatives and weigh the impact of each alternative on various stakeholders

Expenses that result from operating the business are decreases in oeTrue False

true

which is the only statement for a specific date?

balance sheet

auditing

certified public account examines company financial statements and provides an opinion as to how accurately the financial statement presents the company's results and financial position

taxation

tax advice and planning preparing tax returns and representing clients before governmental agencies

management consulting

installing basic accounting software or highly complex systems providing support for major marketing project

private consulting

cost accountingbudgetingaccounting information system design and supporttax planning and preparation

cost accounting

finding the cost of producing speciic products

forensic accounting

uses accounting auditing and investigative skills to conduct invetigatations into theft and fraud

bookkeeping as opposed to accounting usually involves only?

recording

the primary accounting standard-setting body in the US is the?

Financial Accoutning Standard Board

Combining the activities of Kellogg and General Mills would violate the ?

Economic Entity Assumption

The resources a business owns are called what?

assets

revenues and expenses are reported on which statement?

income statement

the ending oe amount is shown where?

both the balance sheet and the oe statement

careers in accounting

1) public2) governemental3) private

net income =

revenue-expenses

account

a record of increases and decreases in a specific asst liability or oe item

debit

increase assts and the decrease liabilities

what is the normal balance for a revenue account?

credit

accoutns that normally have a debit balance are?

1) assets2) oe3) expenses

what is the expanded accounting equation?

a=l+oc-od+rev-exp

what are the 3 masic steps in the recording process?

1) analyze each transaction for its effects on the account2) enter the transaction information in a journal3) transfer the journal information to the appropriate accounts in the ledge-Post

what does the journal do for the recording process?

1) discloses in one place the complete efffects of a transaction2) it provides a chronlogical record of transactions3) helps prevents of locate errors because the debit and credit amounts for each entry can be easily compared

the purchase of supplies on account should result

a debit to supplies and a credit to accounts payable

what is the order of accounts in a ledger?

assets, liabilities, oc, od, rev, exp

ledgeer

a collection of the entire group of account maintained by a company

posting

transfer journal entries to ledger accounts

trail balance

is a list of accounts with their balance at a given time

the normal balance of an account is on the side where a decrease in the account is recordedTrue False

false

how do companies initally record transactions in the genreal journel

chronologically

a credit to a liability account indicates a

increase in the liability

what is the normal balance for an asst account?

debit

what is the normal balance for a drawing accoutn

debit

wht is the normal balance for an oc account

credit

what is the normal balance for the liability account?

credit

what is the normal balance for the od account?

debit

what is the normal balance for an expenses account?

debit

what is the normal balance for a revenue account?

credit

entering transaction data in the jornal is known as

jornalizing

a list of accounts and their balances at a given point in time it called?

trail balance

whare are dollar-signs typically only used?

trail balance and financial statement

what are the steps for preparing a trail balance?

1) list the account titles and their balances in the appropriate debit or crdeit column2) total the debit and credit columns3) prove the equality of the two columns

what is the primary purpose of a trail balance?

prove that the debits equal the credit after posting

unearned rev is a

liabilty