Basic Accounting Principles exam questions and answers 2023

Accounting The systematic recording, reporting, and analysis of financial transactions according to accepted principles in order to provide meaningful financial information Generally Accepted Accounting Principles (GAAP) Accounting rules used to prepare, present, and report financial statements Financial Accounting Standards Board (FASB)Set accounting principles Assets Items of value owned by the company Current Assets Any assets easily converted into cash within one calendar year Cash Money available immediately Accounts Receivable Money owed to the business for purchases made by customers, suppliers, and other vendors Notes Receivable Notes due within the year Total Fixed Assets Total dollar value of all fixed assets in your business, less any accumulated depreciation Liabilities Debts the company owes or obligations the company has Accounts Payable Comprised of all short - term obligations owed by your business to creditors, suppliers, and other vendors Notes Payable Represents money owed on a short term collection cycle Total Current Liabilities Sum if all current liabilities owed to creditors that must be paid within a one year time frame Owners Equity Made up of the initial investment in the business as well as any retained earnings reinvested in the business Double Entry Accounting Recognizes that every financial transaction affects at least two accounts Income Money coming into business Expenses Money leaving business Expense Accounts Specific to the expense they incur Accounting Systems Communicate information which a specific details about a company General Ledger Core of a company's accounting system Subledgers Divisions of the general ledger Balance Sheet Shows the numerical balances determined by the chart of accounts Profit and Loss Statement Shows any changes which have occurred in the numerical balances of the company Sales Figures Represent the total sales, less any product returns or sales discounts Gross Profit Derived by subtracting the cost of goods sold from net sales Operating Expenses Daily expenses incurred in the operation of your business Depreciation Measures the loss in value in an asset Net Income The amount of money the business has earned after paying income taxes Business Cycle Flow of transactions needed it busi