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ACG 2021 Exam 1 Review QUESTIONS WITH COMPLETE SOLUTIONS
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ACG 2021 Exam 1 Review QUESTIONS WITH COMPLETE SOLUTIONS
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ACG 2021 Exam 1 Reviewaccounting Correct Answer: the information system that measures business activities, processes that
information into reports and financial statements, and communicates the results to decision makers
accounting equation Correct Answer: ASSETS = LIABILITIES + STOCKHOLDER'S EQUITY
Balance Sheet Correct Answer: (Statement of Financial Position)
list of an entity's assets, liabilities, and owner's equity as of a specific date.
Dated at a specific time
-accounts payable
-inventory
-long-term debt
-cash
-retained earnings
-common stock
Continuity Assumption or Going- Concern Assumption Correct Answer: holds that the entity will remain
in operation for the foreseeable future
Corporation Correct Answer: a business owned by stockholders.
A legal entitiy
current liability Correct Answer: a debt due to be paid within one year or within the entity's operating
cycle if the cycle is longer than a year
current asset Correct Answer: an asset that is expected to be converted to cash sold, or consumed
during the next 12 months, or within the business's normal cylce if the cycle is longer than a year
deficit Correct Answer: negative balance in retained earnings caused by net losses over a period of
years
dividends Correct Answer: distributions (usually cash) by a corporation to its stockholders
fair value Correct Answer: the amount that a business could sell an asset for, or the amount that a
business could pay to settle a liability
financial accounting Correct Answer: the branch of accounting that provides information
Generally Accepted Accounting Principles Correct Answer: Accounting guidelines , formulated by the
Financial Accounting Standards Board, that govern hoe accounting is practiced
, Historical Cost Principle Correct Answer: Principle that states that assets should be recorded at their
actual cost
Income Statement
(Statement of Operations) Correct Answer: A financial statement listing an entity's revenues, expenses,
and net income or net loss for a specific period of time.
account Correct Answer: the record of the changes that have occurred in a particular asset, liability, or
stockholders equity during a period of time. The basic summary device of accounting
accrued liability Correct Answer: a liability for an expense that has not yet been paid by the company
Credit Correct Answer: right side of an account
Debit Correct Answer: the left side of an account
Journal Correct Answer: the chronological accounting record of an entity's transactions
ledger Correct Answer: the book of accounts and their balances
Posting Correct Answer: Copying amounts from the journal to the ledger
transaction Correct Answer: any event that has a financial impact on the business and can be measured
reliably
Trial Balance Correct Answer: a list of all the ledger accounts with their balancces
Account Format Correct Answer: a BS format that lists assets on the left and liabilities on the right
accrual Correct Answer: an expense or a revenue that occurs before the business pays or receives cash.
An accrual is the opposite of a deferral
accrual accounting Correct Answer: accounting that records the impact of a business event as it occurs,
regardless of whether the transaction affected cash
accrued expense Correct Answer: an expense incurred but not yet paid in cash
accrued revenue Correct Answer: a revenue that has been earned but not yet received in cash
accumulated depreciation Correct Answer: the cumulative sum of all depreciation expense from the
date of acquiring a plant asset
Adjusted Trial Balance Correct Answer: a list of all the ledger accounts with their adjusted balances
book value (of a plant asset) Correct Answer: the asset's cost minus accumulated depreciation
Cash-Basis Accounting Correct Answer: accounting that records only transactions in which cash is
received or paid
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