ACCT 211 Quiz 1
Accounting is also known as... - correct answer The language of business
Accounting - correct answer An information system and measurement system that identifies, records,
and communicates information about an organization's business activities
Managerial Accounting - correct answer Area of accounting aimed mainly at serving the decision-making
needs of internal users; also called the management accounting
Ethics - correct answer beliefs that distinguish right from wrong
GAAP (Generally Accepted Accounting Principles) - correct answer aims to make information relevant,
reliable, and comparable
Proprietorship - correct answer Business that is owned by one person that is not organized as a
corporation; also called sole proprietorship
Partnership - correct answer Business owned by two or more people who are jointly liable for tax and
other obligations
Corporation - correct answer Business legally separate from its owner, meaning it is responsible for its
own acts and its own debts
Shareholders - correct answer owners of a corporation
Accounting Equation - correct answer Assets = Liabilities + Equity
Assets - correct answer resources owned by a business
Liabilities - correct answer What a company owes it non-owners in future payments, products, or
services
Equity - correct answer Refers to the claims of its owners (owner's claim on assets)
Equity _______ from owner investments, called stock issuances, and from revenues - correct answer
increases
Equity ______ from dividends and expenses - correct answer decreases
Dividends - correct answer Outflow of resources such as cash and other assets to stockholders, reduce
equity; when the corporation distributes the income to the owners of the business (double taxation)
Common Stock - correct answer Reflects inflows of resources from stockholders in exchange for stock
Revenues - correct answer Increase equity from sales of products and services to customers
Expenses - correct answer Decrease equity from costs of providing products and services to customers
Income statement - correct answer Describes a company's revenues and expenses along with the
resulting net income or loss over a period of time
Statement of retained earnings - correct answer Explains changes in retained earnings from net income
(or loss) and from any dividends over a period of time
Balance Sheet - correct answer Describes a company's financial position (types and amounts of assets,
liabilities, and equity) at a point in time
Statement of Cash Flow - correct answer Identifies cash inflows (receipts) and cash outflows (payments)
over a period of time
The accounts payable is a ______ account - correct answer Liability
Increases in expenses yield ______ in equity - correct answer decreases
Accounts recieveable - correct answer money owed TO a company by its debtors
Accounts payable - correct answer money owed BY a company to its creditors
Examples of Liabilities - correct answer Wages payable
Accounts payable
Taxes payable
Notes payable
Examples of Equity Account - correct answer Dividends
Common stock
Revenues
Owner's investments
Expenses
Examples of Assets - correct answer Accounts receivable
Building
Cash
Land
Supplies
Equipment
How to calculate net income - correct answer Revenues-Expenses
Accounts receivable account is an... - correct answer asset account
Public accounting - correct answer Includes offering tax advice and auditing services
Private accounting - correct answer Where employees work for businesses
Public and private accounting - correct answer Accounting specialists are highly regarded
What a business owns will always equal what it owes to creditors and owners (accounting equation) T/F -
correct answer True
What is included on a balance sheet? - correct answer Assets, Liabilities, and Equity
What is included on an income statement? - correct answer Rental revenue
Service revenue
Rent expenses
Wages expenses
3 Sections of Cash Flows - correct answer Financing, operating, and investing
Order in which a company prepares financial statements - correct answer 1. Income statements
2. Statement of retained earnings
3. Balance sheets
4. Statement of cash flow
Investments - correct answer Increase equity and are assets an owner puts into the business
Dividends - correct answer Decrease equity and are the assets removed from the company and paid to
the stockholders
Revenues - correct answer Increase equity and are the assets earned from a company's earning activities
Expenses - correct answer Decrease equity and are the cost of assets or services used to earn revenue
Business entity - correct answer Keep business records separate from personal records
Legal entity - correct answer Views person and business as one
Limited Liability - correct answer Can't take the shareholder's personal assets to satisfy the person's
claim
Which one is the only one that pays their own taxes and file tax returns?
(Proprietorship, Partnership, Corporation) - correct answer Corporation
2 components of equity - correct answer Owners and operations
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