Exam 1 Review

Exam 1 Review - Accounting 209 Fall 2007 Review for Exam 1 I Terms to know(could be used in matching fill-in-the-blank or multiple choice questions

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Cash flows from operating activities: Receipts from customers $9 Payments to employees $(7) Increase in cash due to operating activities $2 Cash flows from financing activities Receipts from owners investment $5 Payments of dividend $(1) Increase in cash due to financing activities $4 Increase in Cash $6 Cash – beginning of week $0 Cash – end of week $6 Income Statement Revenue: $17 Less: Expenses: Supplies used: $5 Salaries expense: $7 Total expenses: $12 Income: $5 Liabilities and Stockholders’ Equity $6 Liabilities: able $8 Accounts Payable $6 $1 Stockholders Equity: Common Stock $5 Retained Earnings $4 $9 $15 Total Liabilities and SE $15 Revenues from Operations Investments by Stockholders Stockholders’ Equity Expenses due to Operations Dividends to Stockholders Common Retained es $0 $0 $5 $5 $(1) $5 $4 Accounting 209 Fall, 2007 Review for Exam 1 I. Terms to know (could be used in matching, fill-in-the-blank, or multiple choice questions) Accounting assumptions and principles: Consistency (concept)- this concept requires that once a firm adopts a particular accounting method for its use in recording a certain type of transaction, it should continue to use that method for all future transactions of the same category. Entity (assumption)- this assumption is the basis for the distinction which is made between the entity and its owners. The entity is treated as a unit separate and distinct from its ownership and is accounted for as such. Full disclosure (concept)- requires that all information needed by the users of financial statements should be disclosed in an understandable form. Historical cost (principle)- the assumption that the original acquisition cost of a resource, not its current market value or replacement cost, is the basis to be used in accounting for the resources of an entity. Matching (principle)- requires the accountant to match the expenses incurred during the accounting period with the revenues which were earned during this period. Materiality (principle)- indicates that the accountant should be primarily concerned with those transactions which are of real significance to the users of the report. No specific value can be assigned to any transaction to determine materiality, but if the information affects a financial statement user’s decisions, then it is material. It is the magnitude of an omission or a misstatement of accounting information that, in the light of surrounding circumstances, makes it probable that the judgment of a reasonable person relying on the information would have been changed or influenced by the omission or misstatement. Revenue recognition (principle)- revenue is recognized (or recorded) when substantially everything has been done that is necessary to earn the revenue. Stable monetary unit (assumption)-
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This note was uploaded on 04/14/2008 for the course ACCT 209 taught by Professor Stasny during the Spring '08 term at Texas A&M.

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Exam 1 Review - Accounting 209 Fall 2007 Review for Exam 1 I Terms to know(could be used in matching fill-in-the-blank or multiple choice questions

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