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Accounting 1 Terms- AAMI Questions And Answers Rated A+ 2024.

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Uploaded on October 14, 2024
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accounting 1 terms aami questions and answers ra

Institution Accounting 1 Terms- AAMI
Course Accounting 1 Terms- AAMI

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Accounting 1 Terms- AAMI Questions And
Answers Rated A+ 2024.

Account - correct answer. a device for recording the changes (increases or
decreases) in the fundamental accounting elements.

Accountant - correct answer. one who is concerned with the design of the system of
records, the preparation of reports based upon the recorded data, and the interpretation
of the reports.

Account balance - correct answer. the difference between the total debits and the total
credits in an account.

Accounting - correct answer. a language of business employed to communicate
financial information based upon analyzing, recording, classification, summarization,
reporting, and interpretation of financial data.

Accounting cycle - correct answer. the process involved in journalizing, posting to the
ledger, taking a trial balance, preparing statements, making adjusting and closing
entries, and preparing a post- closing trial balance.

Accounting equation - correct answer. Assets equal Liabilities plus Owner's Equity

Accounts payable - correct answer. an unwritten promise to pay creditors for property,
such as merchandise, supplies, or equipment, purchased on credit, or for services
received on credit.

Accounts receivable - correct answer. an unwritten promise by a customer to pay, at a
later date, for goods sold or services rendered.

Accounts receivable turnover - correct answer. measures how many times per year
receivables are collected.

Calculation: net credit sales divided by average accounts receivable.

, Average accounts receivable*e = (Beginning accounts receivable + Ending accounts
receivable) divided by 2.

Accrual accounting - correct answer. recording in each fiscal period applicable
expenses, whether paid or not, and income earned, whether collected or not.

Accrued expense - correct answer. an expense incurred in operating a business
during an accounting period, but not yet paid.

Accrued income - correct answer. income actually earned during an accounting period
but which will not be received until a future period.

Activity analysis - correct answer. measures how efficiently a firm is utilizing its assets.

Adjusted trial balance - correct answer. a trial balance taken after adjusting entries
have been recorded.

Age of account receivables - correct answer. measures the average time required to
collect receivables

Calculation: 365 days divided by Accounts Receivable Turnover

Age of inventory - correct answer. measures the average time required to sell
inventory.

Calculation: 365 days divided by Inventory Turnover

Assets - correct answer. property of monetary value owned by a business.

Bad debts expense - correct answer. (uncollectible accounts expense; loss from
uncollectible accounts) — accounts receivable that are uncollectible.

Balance sheet - correct answer. (statement of financial position; statement of financial
condition) — a formal financial statement illustrating the assets, liabilities, and owner's
equity of a business as of a specific date.

Bookkeeper(information processor) - correct answer. one who is involved in the
process of recording financial information in a prescribed manner.

Bookkeeping - correct answer. the recording of financial information in a prescribed
manner.

Business papers (source documents) - correct answer. the first record of a business
transaction, such as check 2 stubs, receipts, sales invoices, purchase invoices, cash
register tapes, etc.

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