Questions and Answers
The financial statement that reports the revenues and expenses for a period of time such as a year or a month is the?
The financial statement that reports the assets, liabilities, and stockholders' (owner's) equity at a specific date is the?
Under the accrual basis of accounting, revenues are reported in the accounting period when the?
service or goods have been delivered
Under the accrual basis of accounting, expenses are reported in the accounting period when the?
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Revenues minus expenses equals?
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Resources owned by the company (such as cash, accounts receivable, vehicles) are referred to as?
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Assets are reported on the balance sheet at which amount?
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Obligations (amounts owed) are referred to as?
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Liabilities often have the word ________ in their account title.
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Unearned revenues is what type of account?
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Accounting entries involve a minimum of how many accounts?
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The listing of all of the accounts available for use in a company's accounting system is known as the ________.
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Assets minus liabilities equals?
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Which term is associated with left or left side?
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Which term is associated with right or right side?
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When cash is received, the account cash will be?
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When a company pays a bill, the account Cash will be?
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What will usually cause an asset account to increase?
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What will usually cause the liability account Accounts Payable to increase?
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Entries to expenses such as rent expense are usually?
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Entries to revenue accounts such as service revenues are usually?
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The financial statement described as a 'snapshot' of a company's financial position is the ______________ Sheet.
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The ___________ method (or basis) of accounting reports expenses when they are incurred.
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Land is an asset that is not?
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An asset's book value is its cost minus its ________ depreciation.
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The amount of prepaid insurance that has expired in the accounting period is reported as an?
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A credit entry will cause the cash account balance to?
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Assets = Liabilities + Stockholders equity is known as the basic accounting _____________.
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_________ will cause a corporation's stockholders' equity to increase.
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A listing of the general ledger accounts that does not include the account balance is the ____ of accounts.
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The general ledger accounts whose balances are closed at the end of the accounting year are the _______ statement accounts.
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The statement of cash flows reports amounts according to three activities: ____________________ financing and investing.
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The amount of prepaid insurance that has not expired as of the end of the accounting period is reported as an ______________.
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Property is not reported at its current market value because of the cost?
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The ___________- entry system means that each transaction will affect a minimum of two accounts.
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Unearned Revenues are reported on the balance sheet as a?
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Study Notes
Financial Statements
- Income statement reports revenues and expenses over a period (monthly or yearly).
- Balance sheet presents assets, liabilities, and stockholders' equity at a specific date.
Accrual Accounting
- Under accrual accounting, revenues are recorded when services or goods are delivered.
- Expenses are recorded in the period they match revenues or are consumed.
Key Financial Metrics
- Net income is calculated as revenues minus expenses.
- Stockholders' equity equals assets minus liabilities.
Assets and Liabilities
- Assets are resources owned by a company (e.g., cash, accounts receivable).
- Liabilities are obligations or amounts owed, often labeled with "payable."
- Unearned revenue is classified as a liability.
Accounting Entries
- Double-entry accounting requires a minimum of two account entries for each transaction.
- The chart of accounts lists all accounts available in accounting.
Entry Effects
- Debits generally increase asset accounts and expenses.
- Credits generally increase liability accounts and revenues.
- Cash is debited when received and credited when paid.
Accounting Principles
- Assets are reported on the balance sheet at cost.
- The accrual method recognizes expenses when incurred, not when paid.
- The cost principle states property is not reported at current market value.
Financial Position Snapshots
- The balance sheet is referred to as a "snapshot" of a company's financial position.
- The statement of cash flows categorizes activities into operating, financing, and investing.
Asset Management
- Land is an asset that does not depreciate.
- An asset's book value is its cost minus accumulated depreciation.
Revenue Effects
- Revenues increase stockholders' equity.
- The income statement accounts have their balances closed at the end of the accounting year.
Principle of Accounting
- The basic accounting equation is Assets = Liabilities + Stockholders' Equity.
- The double-entry system ensures every transaction affects at least two accounts and maintains balance between debits and credits.
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Description
Test your knowledge of essential accounting concepts with this set of flashcards. Covering key financial statements like the income statement and balance sheet, these questions will help reinforce your understanding of financial reporting and the accrual basis of accounting.
