Financial Accounting Exam 1

economic entity assumption

A basic assumption of accounting that requires activities of an entity be kept separate from the activities of its owner is referred to as the...

owned by its stockholders

A business organized as a corporation is ...

transaction

Accountants refer to an economic event as a

balance sheet

All of the financial statements are for a period of time except the _____________ _______

economic entity assumption

Andre Dickinson, owner of Andre's Fine Wines, also owns a personal residence that costs $475,000. The market value of his residence is $625,000. During preparation of the financial statements for Andre's Fine Wines, the accounting concept most relevant to the presentation of Andre's home is

relevant

Financial information that is capable of making a difference in a decision is ___________

standards that indicate how to report economic events

Generally accepted accounting principles are

there must be an equal decrease in another asset

If an individual asset is increased, then...

stockholders' equity will increase

If services are rendered for credit, then...

convergence

In order to increase comparability, in recent years, the FASB and IASB have made efforts to reduce the differences between U.S.GAAP and IFRS through a process known as

cost principle

Martin Corporation purchased land in 2007 for $290,000. In 2013, it purchased a nearly identical parcel of land for $460,000. In its 2013 balance sheet, Martin valued these two parcels of land at a combined value of $920,000. By reporting the land in this manner, Martin Corp. has violated the

corporation

Owners enjoy limited liability in a _____________________

ownership claim on total assets

Stockholders' equity can be described as...

identification, recording, communication

The accounting process is correctly sequenced as ____________,_________________,__________________

monetary unit assumption

The assumption that the unit of measure remains sufficiently constant over time is part of the

the statement of financial position

The balance sheet is frequently referred to as

physical laws of nature

The body of theory underlying accounting is not based on

the same on the date of acquisition

The cost of an asset and its fair value are

cost

The cost principle requires that when assets are acquired, they be recorded at ___________

investment securities

The fair value principle is applied for _________ ___________

identify the alternatives and weigh the impact of each alternative on stakeholders

The final step in solving an ethical dilemma is to...

recognize an ethical situation and the ethical issues involved

The first step in solving an ethical dilemma is to...

luca pacioli

The origins of accounting are generally attributed to the work of

information about cash receipts and cash payments of a company

The primary purpose of the statement of cash flows is to report...

financial accounting standards board

The private sector organization involved in developing accounting principles is the

computers

The process of recording transactions has become more efficient because of _____________________

special memos for each class of external users

What techniques are not used by accountants to interpret and report financial information?

liabilities

existing debts and obligations

GAAP

generally accepted accounting principles

revenues

gross increases in stockholders' equity resulting from business activities

recording

Bookkeeping differs from accounting in that bookkeeping primarily involves which part of the accounting process?

preparing accounting reports

Communication of economic events is the part of the accounting process that involves