Accounting - Answer ID, records, communicates economic events of an org to interested internal/external users
GAAP - Answer Standards accepted/universally practiced that indicate how to report economic events
historical cost principle - Answer companies record assets at their cost
...
MBA Accounting Exam 1 Study Guide
Questions And Verified Correct Answers.
Accounting - Answer ID, records, communicates economic events of an org to interested
internal/external users
GAAP - Answer Standards accepted/universally practiced that indicate how to report economic events
historical cost principle - Answer companies record assets at their cost
fair value principle - Answer assets/liabilities should be reported at fair value (the price received to sell
an asset/settle a liability)
monetary unit assumption - Answer companies include only transaction data that can be expressed in
terms of money in their acct records
economic entity assumption - Answer activities of company kept separate/distinct from activities of
owner/others
proprietorship - Answer one owner; small service; owner is personally liable
corporation - Answer ownership in stock shares; separate legal entity; limited liability
A=L+SE - Answer accounting equation
SE=CS+RE - Answer stockholder's equity equation
, RE=R-E-D - Answer retained earnings equation
assets - Answer resources a business owns; provide future services/benefits
liabilities - Answer claims against assets
creditors - Answer party to whom money is owed
stockholder's equity - Answer ownership claim on total assets; AKA residual equity
revenues - Answer business activities entered into for the purpose of earning income
dividends - Answer distribution of cash/other assets to stockholders
expenses - Answer cost of assets/services in the process of earning revenue
transactions - Answer business's economic events recorded by accountants; internal/external; has dual
effect on acct equation
income statement, retained earnings statement, balance sheet, statement of cash flows - Answer 4
financial statements
income statement - Answer reports company's operations over a specific period of time; R followed by
E; shows net income (or loss)
R-E=NI
retained earnings statement - Answer reports changes in RE for a specific period of time (same time
period as IS)
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