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ACT 210: EXAM 1
accounting equation description
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Resources of the company equal creators' and owners' claims to those resources
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When cash payments are made to stockholders, what is the effect on the company's accounts?
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Cash decreases and dividends increase
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Net Income =
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Revenue - Expenses
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Permanent accounts would include
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salaries payable
prepaid rent
unearned revenue
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characteristics of adjusting entries
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allow for the proper application of both the revenue recognition principle and the matching principle
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Providing services to customers on account would affect the balances in which financial statements
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all: Income statement, statement of stockholders' equity, and the balance sheet
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Accounting information that does not provide measurement bias in favor of a particular set of companies has the characteristic of:
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Neutrality
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the costs associated with producing revenues are referred to as:
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expenses
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the assumption that the assets and liabilities of the business are accounted for on the books of the company but not included in the records of the owner is the:
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economic entity assumption
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transactions of a company involving external sources of funding are referred to as:
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financing activities
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what is the primary purpose of financial accounting?
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measure the business transactions and communicate those measures to external users to make decesions
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which of the following is not possible when recording a transaction?
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liabilities increase and assets decrease
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the assumption that a business can continue to remain in operation into the future is the:
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going concern assumption
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