accounting final-1

accounting final-1 - First 4 chapters (32 questions) - - -...

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First 4 chapters (32 questions) - Glossary from the end of the chapters terms: GAAP : generally accepted accounting principles, the measurement rules used to develop the information in financial statements FASB : Financial Accounting Standards Board, The private sector body given the primary responsibility to work out the detailed rules that become generally accepted accounting principals. SEC : Securities and Exchange Commission, The US government agency that determines the financial statements that public companies must provide to stockholders and the measurement rules that they must use in producing those statements. Audit : An examination of the financial reports to ensure that they represent what they claim and conform to GAAP. - Corporation : (pg. 26) Advantages: (1) owners only have to deal with limited liability ; the corporation is viewed as a separate business entity that must be accounted for separately from its owners. (2) Continuity of life. (3) ease in transferring ownership. (4) opportunity to raise a lot of money by selling shares. disadvantages: its income may be subject to double taxation - Conservatism : suggests that care should be taken not to overstate assets and revenues or understate liabilities and expenses (pg. 239) consistency : Information that can be compared over time because similar accounting methods have been applied. (pg. 239) - Building blocks, journals entries, debits and credits, t accounts, pluses and minus asssets accounts: are plusses and minuses liabilities and equity: minus and pluses b/c they’re on the other side of the accounting equation - One way accounts : like expenses only go up and are debits only Revenues : credits only Dividends : debit accounts - Post: The process of transferring balances from the journal to the ledger, - Adjusting journal entries : 4 (pg. 166) revenues: Deferred revenues (unearned revenues): Previously recorded liabilities that were created when cash was received in advance, and that must be adjusted for the amount of revenue actually earned during the period (debit unearned revenue account, (-) liabilities) Accrued revenues : revenues that were earned but not recorded because cash was received after the services were performed or goods were delivered. (record a receivables account, (+) assets) Expenses: prepaid/deferred expenses : previously recorded assets (prepaid rent, supplies, and equipment) that were created when cash was paid in advance and that must be
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adjusted for the amount of expense actually incurred during the period through use of the asset (credit the prepaid expense account (-) assets) Accrued expenses : expenses that were incurred but were not recorded because cash was paid after the goods/services were used (credit payable account (+L)) **All affect one income statement and one balance sheet account (cash is never made in the adjusting journal entry) - Closing journal entries (pg. 182): transfers balances in temporary accounts to RE, and establishes zero balances in temporary accounts. revenues
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This note was uploaded on 02/22/2012 for the course ACCT 1310 taught by Professor Staff during the Fall '10 term at Texas State.

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accounting final-1 - First 4 chapters (32 questions) - - -...

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