ACG 2021 Exam 1
Balance Sheet - ANS-a financial statement that reports the assets and claims to those assets at
a specific point in time
Basic accounting equation - ANS-Assets= Liabilities + Equity
Common Stock - ANS-the total amount paid in by stockholders for the shares they purchase
Corporation - ANS-a business organized as a separate legal entity having ownership divided
into transferable shares of stock
Dividends - ANS-payments of cash from a corporation to its stockholders
Expenses - ANS-the cost of assets consumed or services used in the process of generating
revenues
income statement - ANS-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 - ANS-the debts and obligations of a business.
Liabilities represent the amounts owed to creditors
net income - ANS-the amount by which revenues exceed expenses
net loss - ANS-the amount by which expenses exceed revenues
partnership - ANS-a business owned by two or more persons associated as partners
retained earnings - ANS-the amount of net income retained in the corporation
retained earnings statement - ANS-a financial statement that summarizes the amounts and
causes of changes in retained earnings for a specific period of time
revenue - ANS-the increase in assets that result from the sale of a product or service in the
normal course of business
sole proprietorship - ANS-a business owned by one person
statement of cash flows - ANS-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 - ANS-the owners' claim on total assets
Classified Balance sheet - ANS-a balance sheet that contains a number of standard
classifications and sections
Conservatism - ANS-the approach of choosing an accounting method, when alternatives exist,
that will least likely overstate assets and net income
consistency - ANS-use of the same accounting principles and methods from year to year within
a company
cost principle - ANS-an accounting principle that states that companies should record assets at
their costs
current assets - ANS-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 - ANS-obligations that a company reasonably expects to pay within the next
year or operating cycle, whichever is longer
Financial Accounting Standards Board (FASB) - ANS-the primary accounting standard-setting
body in the US
free cash flow - ANS-cash remaining from operating activities after adjusting for capital
expenditures and dividends paid
full disclosure principle - ANS-accounting principle that dictates that companies disclose
circumstances and events that make a difference to financial statement users
Generally accepted accounting principles (GAAP) - ANS-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 - ANS-assets that do not have physical substance
Ex: patents, goodwill
International accounting standards board (IASB) - ANS-an accounting standard-setting body
that issues standards adopted by many countries outside of the US
liquidity - ANS-the ability of a company to pay obligations that are expected to become due
within the next year or operating cycle
Balance Sheet - ANS-a financial statement that reports the assets and claims to those assets at
a specific point in time
Basic accounting equation - ANS-Assets= Liabilities + Equity
Common Stock - ANS-the total amount paid in by stockholders for the shares they purchase
Corporation - ANS-a business organized as a separate legal entity having ownership divided
into transferable shares of stock
Dividends - ANS-payments of cash from a corporation to its stockholders
Expenses - ANS-the cost of assets consumed or services used in the process of generating
revenues
income statement - ANS-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 - ANS-the debts and obligations of a business.
Liabilities represent the amounts owed to creditors
net income - ANS-the amount by which revenues exceed expenses
net loss - ANS-the amount by which expenses exceed revenues
partnership - ANS-a business owned by two or more persons associated as partners
retained earnings - ANS-the amount of net income retained in the corporation
retained earnings statement - ANS-a financial statement that summarizes the amounts and
causes of changes in retained earnings for a specific period of time
revenue - ANS-the increase in assets that result from the sale of a product or service in the
normal course of business
sole proprietorship - ANS-a business owned by one person
statement of cash flows - ANS-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 - ANS-the owners' claim on total assets
Classified Balance sheet - ANS-a balance sheet that contains a number of standard
classifications and sections
Conservatism - ANS-the approach of choosing an accounting method, when alternatives exist,
that will least likely overstate assets and net income
consistency - ANS-use of the same accounting principles and methods from year to year within
a company
cost principle - ANS-an accounting principle that states that companies should record assets at
their costs
current assets - ANS-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 - ANS-obligations that a company reasonably expects to pay within the next
year or operating cycle, whichever is longer
Financial Accounting Standards Board (FASB) - ANS-the primary accounting standard-setting
body in the US
free cash flow - ANS-cash remaining from operating activities after adjusting for capital
expenditures and dividends paid
full disclosure principle - ANS-accounting principle that dictates that companies disclose
circumstances and events that make a difference to financial statement users
Generally accepted accounting principles (GAAP) - ANS-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 - ANS-assets that do not have physical substance
Ex: patents, goodwill
International accounting standards board (IASB) - ANS-an accounting standard-setting body
that issues standards adopted by many countries outside of the US
liquidity - ANS-the ability of a company to pay obligations that are expected to become due
within the next year or operating cycle
