Terms
I am the economic resources of a company. What am I?
Assets
All business transactions affect at least how many accounts?
2
Can business transactions affect only one side of the accounting equation?
Yes! (ie. Using cash to purchase supplies - 1 asset increases and another decreases)
Who pays all expenses, earns all revenue and takes all withdrawals?
Owner
Who are the main users of financial accounting information as opposed to management accounting information?
External decision makers
This is often referred to as Net Assets.
Owner's Equity
The owner takes $600 from the company for personal bills, what accounts are affected?
Cash and Owner's Equity(withdrawals)
Assets ($50K), Owners Equity ($40K). What are the liabilities?
10K
What is the equation for net profit (or net loss)?
Revenues – Expenses
What form of business is a separate taxable entity?
Corporation
An activity that causes a change in financial claims is called a...?
Transaction
The company invoices a client $10,000 for a completed consulting job. Which 2 accounts are affected?
Accounts Receivable and Revenues
Vehicles $25K; Office Furniture $10K; Accounts Receivable $5K; Tools $10K; Unearned Revenue $10K Accounts Payable $15K; . How much is Owner's Equity?
25K
We complete a job for a client and he pays us $10K cash that day. What accounts are affected?
Cash and revenue
What assumption assumes that a business will use all its resources rather than be forced to accept whatever price that they can get due to bankruptcy?
Going concern assumption
Money that a customer owes to your business is called?
Accounts receivable
Name 3 accounts affected; business buys computers and furniture from Best Buy on account.
Office Equipment, Office Furniture and Accounts Payable
Owner's Equity $25K; Vehicles $5K; Staples account - office supplies $5K; Accounts Receivable $10K; Home Depot Account $10K; Office Furniture $5K; Office supplies $5K. How much cash does the company have?
$15K
The owners equity account has $55K when the $2K rent comes due. How much will it have after the rent is paid?
$53K
Name 2 of the 4 qualitative characteristics for information to be useful
Relevance, Comparability, Reliability, Understandability
Cash collected in advance of supplying a good or service is called?
Unearned revenue
Your golfing partner, Pedro cannot pay his debt to the company for a consulting job we did for him. We have agreed to take a small piece of his property to expand our parking and several new computers he is not using as payment. What accounts are affected?
Accounts Receivable, Land (PPE), Office Equipment
You may use a calculator. Your company has no debt but has the following assets: Building $148,253, Vehicles: $38,122, Tools: $9,824, Furniture $26,245. What is the total for accounts payable?
$0! Your company has no debt!
When the owner takes a withdrawal from the company, her owner's equity goes down. How is this possible if the owner now has more money?
Owner's equity is the amount of money the business owes her. She may have more money personally but that money was taken out of the company's equity.
What standards do most publicly accountable enterprises follow?
International Financial Reporting Standards (IFRS)