Accounting Final Info Quiz 1

consistency

A company's use of the same accounting principles from year to year.

faithful representation

Accounting information must be complete, neutral, and free from error.

relevance

Accounting information should help users predict future events, and should confirm or correct prior expectations.

historical cost principle

Assets are recorded and reported at original purchase price.

going concern assumption

Assumes a business will remain in operation for the foreseeable future.

investing activity

Cash paid to purchase a new office building. is what kind of activity

financing activities

Cash paid to stockholders (dividends). is what type of activity

operating activities

Cash paid to suppliers. is what kind of activity

operating activity

Cash payments to suppliers. is an example of what?

investing activity

Cash purchase of equipment is an example of what?

operating activity

Cash receipts from customers is an example of what?

operating activities

Cash received from customers are known as

financing activities

Cash received from issuing new common stock. is what kind of activity

asset

Classify each of these items as an asset, liability, or stockholders' equity: buildings

Stockholders equity

Classify each of these items as an asset, liability, or stockholders' equity: common stock

liability

Classify each of these items as an asset, liability, or stockholders' equity: income taxes payable

liability

Classify each of these items as an asset, liability, or stockholders' equity: mortgage payable

liability

Classify each of these items as an asset, liability, or stockholders' equity: notes payable

liability

Classify each of these items as an asset, liability, or stockholders' equity:accounts payable

asset

Classify each of these items as an asset, liability, or stockholders' equity:equipment

stockholders equity

Classify each of these items as an asset, liability, or stockholders' equity:retained earnings

comparability

Different companies use the same accounting principles.

financing activity

Issuance of common stock for cash is an example of what?

monetary unit assumption

Items not easily quantified in dollar terms are not reported in the financial statements.

financing activity

Payment of cash dividends is an example of what?

economic entity assumption

Personal transactions are not mixed with the company's transactions.

investing activity

Sale of old machine for cash is an example of what?

cost constraint

The cost to provide information should be weighed against the benefit that users will gain from having the information available.

materiality

The judgment concerning whether an item's size makes it likely to influence a decision-maker.

periodicity assumption

The life of a business can be divided into artificial segments of time.

full disclosure principle

The reporting of all information that would make a difference to financial statement users.

asset

identify whether the item is an asset, liability, stockholders' equity, revenue, or expense item: accounts recievable

asset

identify whether the item is an asset, liability, stockholders' equity, revenue, or expense item: cash

expense

identify whether the item is an asset, liability, stockholders' equity, revenue, or expense item: cost of goods sold

expense

identify whether the item is an asset, liability, stockholders' equity, revenue, or expense item: interest expense

asset

identify whether the item is an asset, liability, stockholders' equity, revenue, or expense item: inventory

liability

identify whether the item is an asset, liability, stockholders' equity, revenue, or expense item: notes payable

asset

identify whether the item is an asset, liability, stockholders' equity, revenue, or expense item: prepaid insurance

stockholders equity

identify whether the item is an asset, liability, stockholders' equity, revenue, or expense item: retained earnings

expense

identify whether the item is an asset, liability, stockholders' equity, revenue, or expense item: salaries and wage expense

revenue

identify whether the item is an asset, liability, stockholders' equity, revenue, or expense item: sales revenue

revenue

identify whether the item is an asset, liability, stockholders' equity, revenue, or expense item: service revenue

income statement

what is being described here? it accounts for the whole year. It analyzes total revenues- expenses to find the net income/loss