ACCT 211 Chapter 1 Flashcards

Questions and Answers

Define accounting.

It identifies, records, and communicates business transactions or communicates financial information.

What is an external user of accounting information?

Does not directly run the organization.

A process of analyzing data to identify meaningful relations and trends is called what?

Analytics/Analysis.

According to the fraud triangle, what are the three factors that must exist for a person to commit fraud?

Opportunity, rationalization, pressure/incentive. Signup and view all the answers

What are Generally Accepted Accounting Principles?

The concepts and rules that govern financial accounting practice. Signup and view all the answers

What consists of the FASB conceptual framework?

Objectives, qualitative characteristics, elements, recognition and measurement. Signup and view all the answers

An _____ user of accounting information does not directly run the organization.

external Signup and view all the answers

Which of the statement(s) below define(s) an asset?

All of the above Signup and view all the answers

A graphical presentation of data to help in understanding their significance is called what?

Visualization. Signup and view all the answers

Which of the following statements explain(s) how the accounting equation applies to businesses?

The equation states that Assets = Liabilities + Equity Signup and view all the answers

An employee that is having trouble paying his personal bills might exhibit which fraud factor?

Pressure. Signup and view all the answers

What best represents the reason for the accounting equation?

The total of everything owned by a business must always equal the total of what the business owes to creditors and owners. Signup and view all the answers

Generally Accepted Accounting Principles (GAAP) wants information to have?

Faithful representation and relevance. Signup and view all the answers

What are part of the FASB conceptual framework?

All of the above Signup and view all the answers

What is the most accurate definition of dividends?

Outflows of cash or other assets paid to the owners of a corporation. Signup and view all the answers

Identify the correct definition of an asset.

An asset is a resource that a business owns or controls. Signup and view all the answers

Which of the following statements describe the effect of expenses on equity?

Expenses cause equity to decrease Signup and view all the answers

Which of the following statements is correct regarding revenues?

Revenues cause equity to increase Signup and view all the answers

What lists the rules of entering transactions into the accounting equation?

The accounting equation must always remain in balance Signup and view all the answers

How do you record Jack Pickle's initial investment in common stock in the accounting equation?

Increase Cash by $4,000; Increase Common Stock by $4,000. Signup and view all the answers

When supplies are purchased on credit, it means what?

The business will pay for the supplies at a later time. Signup and view all the answers

Which of the following statements represent(s) how expenses affect equity?

Both A and B Signup and view all the answers

To record the purchase of supplies for cash, the correct entry into the accounting equation would include an increase to and a decrease to _.

Supplies/cash Signup and view all the answers

Which of the following statements are true regarding the effect of revenues on the equity of a business?

Both A and B Signup and view all the answers

How would you record the purchase of office equipment costing $3,000?

Decreasing Cash; increasing Equipment. Signup and view all the answers

The accounts payable account is a(n) _____ account.

Liability. Signup and view all the answers

Which of the following statements describe how expenses affect equity?

Expenses cause equity to decrease Signup and view all the answers

What is the first financial statement to be prepared?

Income statement. Signup and view all the answers

Calculate the ending balance in the retained earnings account for Sheldon Company given the values.

$5750. Signup and view all the answers

True or false: Dividends are resources paid to the owners of a corporation/stockholders.

False Signup and view all the answers

How is return on assets computed?

Net Income divided by Average Total Assets Signup and view all the answers

Which list identifies only accounts that would appear on a balance sheet?

Common Stock, Equipment, Accounts Payable. Signup and view all the answers

Which accounts belong on the statement of retained earnings?

Retained earnings and Dividends. Signup and view all the answers

Calculate Boaz Company's return on assets.

4.5% Signup and view all the answers

Identify which of the following accounts would appear on a balance sheet.

All of the above Signup and view all the answers

The statement of retained earnings explains changes in equity from net income (or loss) and from any ______ over a period of time.

Dividends. Signup and view all the answers

Given the beginning retained earnings of Jacob's Chocolates, calculate the ending balance.

$13,700. Signup and view all the answers

True or false: Return on assets is computed as Net Income divided by Total Assets.

False Signup and view all the answers

Study Notes

Accounting Basics

Accounting involves identifying, recording, and communicating financial information about business transactions.
External users of accounting information are those who do not directly run the organization.

Data Analysis and Visualization

Data analytics is the process of analyzing data to find significant relationships and trends.
Data visualization refers to the graphical presentation of data to enhance understanding.

Fraud Triangle

The three factors of the fraud triangle include opportunity, rationalization, and pressure/incentive.

Accounting Principles and Framework

Generally Accepted Accounting Principles (GAAP) govern financial accounting practices, ensuring faithful representation and relevance of information.
The FASB conceptual framework encompasses objectives, qualitative characteristics, elements, recognition, and measurement.

Assets and the Accounting Equation

An asset is a resource that is expected to provide future benefits, controlled by the business, or an amount owned.
The accounting equation states that Assets = Liabilities + Equity, emphasizing that what a business owns equals what it owes.

Impact of Revenues and Expenses on Equity

Revenues result in an increase in equity; common forms include consulting services and commissions.
Expenses lead to a decrease in equity, highlighting their negative impact during financial assessments.

Dividends and Financial Transactions

Dividends represent outflows of cash or assets to shareholders and are part of equity considerations.
Transactions like purchasing supplies for cash affect the accounting equation by increasing supplies and decreasing cash.

Financial Statements Preparation

Financial statements are prepared in the following order: Income Statement, Statement of Retained Earnings, Balance Sheet, and Statement of Cash Flows.
The Statement of Retained Earnings details changes in equity through net income and dividends over time.

Retained Earnings and Return on Assets

Retained earnings reflect the cumulative earnings retained for future use after paying dividends.
Return on assets (ROA) is calculated by dividing Net Income by Average Total Assets, providing a metric for financial efficiency.

Essential Accounting Accounts

Key accounts reflecting a company’s financial position on the Balance Sheet include Cash, Equipment, and Accounts Payable.
The accounts payable account is classified as a liability, indicating obligations to pay suppliers.

Transaction Example

Recording transactions typically involves balancing the accounting equation, where increases in one account correspond to decreases in another, maintaining overall balance.

Analysis of Specific Financial Scenarios

To assess company performance or calculate financial metrics, specific examples, such as starting capital or retained earnings, can showcase practical applications of accounting principles.

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Description

Test your knowledge of key concepts in accounting with these flashcards covering external users and data analysis. This quiz is essential for understanding the fundamental principles introduced in Chapter 1 of ACCT 211. Perfect for students preparing for exams or needing a quick review of essential terminology.

ACCT 211 Chapter 1 Flashcards

Questions and Answers

Define accounting.

What is an external user of accounting information?

A process of analyzing data to identify meaningful relations and trends is called what?

According to the fraud triangle, what are the three factors that must exist for a person to commit fraud?

What are Generally Accepted Accounting Principles?

What consists of the FASB conceptual framework?

An _____ user of accounting information does not directly run the organization.

Which of the statement(s) below define(s) an asset?

A graphical presentation of data to help in understanding their significance is called what?

Which of the following statements explain(s) how the accounting equation applies to businesses?

An employee that is having trouble paying his personal bills might exhibit which fraud factor?

What best represents the reason for the accounting equation?

Generally Accepted Accounting Principles (GAAP) wants information to have?

What are part of the FASB conceptual framework?

What is the most accurate definition of dividends?

Identify the correct definition of an asset.

Which of the following statements describe the effect of expenses on equity?

Which of the following statements is correct regarding revenues?

What lists the rules of entering transactions into the accounting equation?

How do you record Jack Pickle's initial investment in common stock in the accounting equation?

When supplies are purchased on credit, it means what?

Which of the following statements represent(s) how expenses affect equity?

To record the purchase of supplies for cash, the correct entry into the accounting equation would include an increase to ________ and a decrease to _________.

Which of the following statements are true regarding the effect of revenues on the equity of a business?

How would you record the purchase of office equipment costing $3,000?

The accounts payable account is a(n) _____ account.

Which of the following statements describe how expenses affect equity?

What is the first financial statement to be prepared?

Calculate the ending balance in the retained earnings account for Sheldon Company given the values.

True or false: Dividends are resources paid to the owners of a corporation/stockholders.

How is return on assets computed?

Which list identifies only accounts that would appear on a balance sheet?

Which accounts belong on the statement of retained earnings?

Calculate Boaz Company's return on assets.

Identify which of the following accounts would appear on a balance sheet.

The statement of retained earnings explains changes in equity from net income (or loss) and from any ______ over a period of time.

Given the beginning retained earnings of Jacob's Chocolates, calculate the ending balance.

True or false: Return on assets is computed as Net Income divided by Total Assets.

Study Notes

Accounting Basics

Data Analysis and Visualization

Fraud Triangle

Accounting Principles and Framework

Assets and the Accounting Equation

Impact of Revenues and Expenses on Equity

Dividends and Financial Transactions

Financial Statements Preparation

Retained Earnings and Return on Assets

Essential Accounting Accounts

Transaction Example

Analysis of Specific Financial Scenarios

Studying That Suits You

Description

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