Accounting 101 Final Exam Study Guide || All Correct.
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Course
Accounting 101
Institution
Accounting 101
What is accounting? correct answers the action or process of keeping financial accounts
revenues correct answers inflows of assets resulting from the sale of goods and services
expenses correct answers outflow of assets resulting from the sale of goods and services
internal user correct an...
international accounting standards board (IFRS) is responsible for correct answers developing a
single set of worldwide accounting standards
These standards will help companies to reduce accounting costs, make it easier to acquire foreign
companies, and facilitate comparisons between foreign companies correct answers (IFRS)
international accounting standards board
primary objective of financial reporting correct answers provide economic information to permit
users of the information to make informed decisions
what makes information relevant correct answers it must be able to make a difference in a
decision
assets are recorded at historical/original cost because correct answers it is objective and
verifiable
financial information should be understandable to whom correct answers those willing to spend
the necessary time to understand it
balance sheet correct answers lists assets, liabilities, and owner's equity
income statement correct answers revenues minus expenses equal net income
net income correct answers revenues - expenses
order of statement preparation correct answers income statement, statement of retained earnings,
balance sheet and statement of cash flows
account and types of accounts correct answers a record or statement of financial expenditure or
receipts relating to a particular period or purpose
, real, personal, and nominal
how transactions affect the accounting equation correct answers the balance is maintained
because every business transaction affects at least two of a company's accounts such as:
when a company borrows money from a bank
the company's assets will increase and its liabilities will increase by the same amount
left side correct answers debit
right side correct answers credit
initial recording of transaction is made in a journal/general journal is correct answers journal
entry, journalizing this entry is then posted to ledger/general ledger
purpose of trial balance correct answers lists all accounts with their balances, assets first, then
liabilities and stockholders equity. shows whether total debits equal total credits
accounts receivable correct answers money owed to a business by its clients ( customers or
debtors) and shown on its balance sheet as an asset
accounts payable correct answers money owed by a business to its suppliers shown as a liability
on a company's balance sheet
ending balance correct answers the starting balance is equal to the ending balance
when is revenue recognized with respect to accrual accounting correct answers when earned
when is revenue recognized with respect to cash basis accounting correct answers when cash is
received
when are the adjusting entries required correct answers end of the period
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