Flashcard Set Preview
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| 1 |
What are the two functions of accounting?
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(1) to measure the activities of the company and (2) to communicate those measurements to people.
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| 2 |
Into what two broad categories can accounting be classified?
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(1) managerial accounting and (2) financial accounting.
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| 3 |
Define managerial accounting.
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Managerial accounting deals with the methods accountants use to provide information to an organization's...
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| 4 |
Define financial accounting.
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The two primary functions of financial accounting are (1) to measure business activities of...
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| 5 |
Who are the two primary external users of financial accounting information?
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(1) Investors and (2) creditors.
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| 6 |
Define investor.
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Investors make decisions related to buying and selling the company's stock (shares of...
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| 7 |
Define creditor.
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Creditors make decisions related to lending money to the company.
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| 8 |
Identify the three fundamental business activities that financial accounting measures.
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(1) Financing activities, (2) investing activities, and (3) operating activities.
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| 9 |
Define financing activities.
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Financing activites are transactions involving external resources.
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| 10 |
What are the two basic sources of external funding?
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(1) Owners and (2) creditors.
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| 11 |
Define investing activities.
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Investing activities include the purchase and sale of (1) long-term resources such as land,...
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| 12 |
Define operating activities.
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Operating activities include transactions that relate to the primary operations of the company,...
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| 13 |
Define corporation.
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A corporation is an entity that is legally separate from its owners.
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| 14 |
Define assets.
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Assets are the resources owned by a company.
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| 15 |
Define liabilities.
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Liabilities are amounts owed to creditors.
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| 16 |
Define stockholders' equity.
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Stockholders' equity is the owners' claims to the company's resources.
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| 17 |
What is the accounting equation?
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assets = liabilities + stockholders' equity
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| 18 |
Define revenues.
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Revenues are the amounts earned from selling products or services to customers.
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| 19 |
Define expenses.
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Expenses are the costs of providing products and services.
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