Exam 15: Basic Accounting: Concepts, Techniques, and Conventions

Decreases in ownership claims arising from delivering goods or services or consuming assets

Historical costs are used on the balance sheet because these costs are verifiable and objective.

Entries for expiration of unexpired costs and realization earning) of unearned revenues are usually made before the related cash flows.

A process of accounting where revenue and expense recognition would occur when the company receives and disburses cash

Accuracy supported by a high extent of consensus among independent measures of an item

The _____ adjusting entry increases owners' equity and decreases liabilities.

An entry on the left side of an account

Revenue and expense accounts are permanent stockholders' equity accounts.

The _____ is are) largely responsible for developing generally accepted accounting principles in the United States.

Companies carry forward assets because they expect to recover the cost of these assets in the form of cash inflows or reduced cash outflows) in future periods

Entity's economic obligations to nonowners

The _____ is not one of the three major financial statements.

The ownership claim arising from funds invested

Depreciation applies to assets such as accounts receivable and equipment.

Van Halen Company pays weekly wages every Friday.The current month ends on a Wednesday.The adjusting entry for wages will _____.

Collections from customers that companies receive and record before they earn the revenue

The _____ would result in a decrease in net income under the cash basis, but it would not result in a decrease in net income under the accrual basis.

There is no direct relationship between the income statement and balance sheet.

_____ is an example of an explicit transaction.

For a corporation, assets must equal liabilities and paid-in capital.