ACC 131 - Chapter 1

If assets are $99,000 and liabilities are $32,000, then equity equals:

$ 67,000.

If equity is $300,000 and liabilities are $192,000, then assets equal:

$492,000.

The description of the relation between a company's assets, liabilities, and equity, which is expressed as Assets = Liabilities + Equity, is known as the:

Accounting equation.

Generally accepted accounting principles:

Are based on long used accounting practices, Are basic assumptions, concepts, and guidelines for preparing financial statements, Are detailed rules used in reporting on business transactions and events, and Arise from the rulings of authoritative bodies.

Ethics:

Are beliefs that separate right from wrong, And law often coincide, Help to prevent conflicts of interest, and Are critical in accounting

Resources owned or controlled by a company that are expected to yield benefits are:

Assets.

Career opportunities in accounting include:

Budgeting, Auditing, Cost accounting, and Internal Auditing

Decreases in equity that represent costs of assets or services used to earn revenues are called:

Expenses.

The private board that currently has the authority to establish generally accepted accounting principles is the:

FASB.

Accounting is an information and measurement system that:

Identifies business activities, Records business activities, Communicates business activities, and Helps people make better decisions

Accounting

Is an information and measurement system. Identifies, records, and communicates information about business activities Helps people make better decisions Involves interpreting information and designing information systems to provide useful reports that monitor and control a company's activities.

Net Income:

Is the excess of revenues over expenses.

Creditors' claims on the assets of a company are called:

Liabilities.

Internal users of accounting information include:

Managers

A Certified Public Accountant

Must meet education and experience requirements, Must pass an examination, Must exhibit ethical character, and May also be a Certified Management Accountant.

Net income:

Occurs when revenues exceed expenses.

The rule that (1) requires revenue to be recognized at the time it is earned, (2) allows the inflow of assets associated with revenue to be in a form other than cash, and (3) measures the amount of revenue as the cash plus the cash equivalent value of any noncash assets received from customers in exchange for goods or services, is called the:

Revenue recognition principle.

Which of the following statements is true about assets?

They are economic resources owned or controlled by the business. They are expected to provide future benefits to the business. They appear on the balance sheet. Claims on them are shared between creditors and owners.

Revenue is properly recognized:

Upon completion of the sale or when services have been performed and the business obtains the right to collect the sales price.

Distributions by a business to its owners are called:

Withdrawals.