Accounting Terminologies

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Income Statement is the financial statement that reports the revenues and expenses for a period of time such as a year or a month.

The Balance Sheet is the financial statement that reports the assets, liabililities, and stockholders' (owner's) equity at specific date.

Under the accrual basis of accounting, revenues are reported in the accounting period when the service or goods have been delivered

Under the accrual basis of accounting, expenses are reported in the accounting period when the expense matches the revenues or is used up

Resources owned by a company (such as cash, accounts receivable, vehicles) are reported on the balance sheet and are referred to as Assets.

Assets are usually reported on the balance sheet at cost amount?

Obligations (amounts owed) are reported on the balance sheet and are referred to as liabilities.

Liabilities often have the word Payable in their account title.

Unearned Revenues is what type of account? i.e. Liability

The listing of all of the accounts available for use in a company's accounting system is known as the Chart of Account

The personal assets of the owner of a company will not appear on the company's balance sheet because of which principle/guideline? i.e. Economic Entity

Which principle/guideline requires a company's balance sheet to report its land at the amount the company paid to acquire the land, even if the land could be sold today at a significantly higher amount? i.e. Cost

Which principle/guideline allows a company to ignore the change in the purchasing power of the dollar over time? i.e. Monetary Unit

Which principle/guideline requires the company's financial statements to have footnotes containing information that is important to users of the financial statements? i.e. Full Disclosure

Which principle/guideline justifies a company violating an accounting principle because the amounts are immaterial? i.e. Materiality

Which principle/guideline is associated with the assumption that the company will continue on long enough to carry out its objectives and commitments? i.e. Going Concern

When the accountant has to choose between two acceptable alternatives, the accountant should select the alternative that will report less profit, less asset amount, or a greater liability amount. This is based upon which principle/guideline? i.e. Conservatism

A large company purchases a $250 digital camera and expenses it immediately instead of recording it as an asset and depreciating it over its useful life. This practice may be acceptable because of which principle/guideline? i.e. Materiality

A corporation pays its annual property tax bill of approximately $12,000 in one payment each December 28. During the year, the corporation's monthly income statements report Property Tax Expense of $1,000. This is an example of which accounting principle/guideline? i.e. Matching

A company sold merchandise of $8,000 to a customer on December 29, 2006. The company's sales terms require the customer to pay the company by January 28, 2007. The company's income statement reported the sale in December 2006. This is proper under which accounting principle/guideline? i.e. Revenue Recognition

. The creative chief executive of a corporation who is personally responsible for numerous inventions and innovations is not reported as an asset on the corporation's balance sheet. The accounting principle/guideline that prevents the corporation for reporting this person as an asset is Cost

An asset with a cost of $120,000 is depreciated over its useful life of 10 years rather than expensing the entire amount when it is purchased. This complies with which principle/guideline? i.e. Matching

Near the end of the year 2006, a company required a customer to pay $200,000 as a deposit for work that is to begin in early 2007. At the end of 2006 the company reported the $200,000 as a liability on its balance sheet. Which accounting principle/guideline prevented the company from reporting the $200,000 on its 2006 income statement? i.e. Revenue Recognition

A company borrowed $100,000 on December 1, 2006 and will make its only payment for interest when the note is paid off on June 1, 2007. The total interest for the six months will be $3,600. On the December 2006 income statement the accountant reported Interest Expense of $600. This action was the result of which accounting principle/guideline? i.e. Matching