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

The cash basis of accounting does not match expenses with the revenues they help generate.

The acquisition of inventory on open account will _____.

The matching convention attempts to match revenues and expenses to a particular period.

The accounting convention of _____ means selecting the method of measurement that yields the gloomiest immediate results.

Dividends paid are considered an expense on the income statement.

By federal law, the agency with the ultimate responsibility for specifying the generally accepted accounting principles for U.S.companies whose stock is held by the general investing public

Recognizes the impact of transactions on the financial statements in the periods when revenues and expenses occur instead of when cash is received or disbursed

Valuing assets at replacement cost to facilitate the measurement of "economic income" violates the _____ accounting convention.

Dividends reduce stockholders' equity.

Source documents give evidence of both explicit and implicit transactions.

Unexpired costs are expenses.

Transactions such as credit sales, credit purchases, cash received on account, and cash disbursed on account, that are supported by source documents

Explicit evidence of any transactions that occur in the entity's operation

Distributions of assets to stockholders that reduce retained earnings

When an asset is depreciated, owners' equity decreases.

Unexpired costs are considered_____.

Any asset that ordinarily becomes an expense in future periods

Increases in ownership claims arising from the delivery of goods or services

A business organized as a separate legal entity and owned by its stockholders

Liabilities are economic resources.