Financial Accounting Midterm Questions And Answers 100% Verified A+ Guaranteed

True or false: the terms debit and credit mean increase and decrease respectively. {Ans: FALSE.}What is the term used to describe the owner's equity section of a corporation? {Ans: Stockholders equity.}Time period assumption: {Ans: Separates financial information into time periods for reporting purposes (generally a month, quarter, or year).}Effects to accounting equation: receipt of cash on account {Ans: Increase in assets (cash), decrease in assets (accounts receivable).}Confirmatory value: {Ans: Confirms or corrects prior expectations.}Effects to accounting equation: services preformed for cash and credit {Ans: Increase in assets (cash and accounts receivable), increase in stockholders equity (revenue).}What are the content and purpose of a post-closing trial balance? {Ans: -Content: only balance sheet accounts. -Purpose: prove the equality of the permanent account balances that are carried forward into the next accounting period.}Liability: {Ans: Claims against assets/existing debts and obligations.}Predictive value: {Ans: Accounting information should help provide accurate expectations about future events.}Proper flow of information through the accounting system: {Ans: -Business transaction occurs. -Information entered in the journal. -Debits and credits posted to ledger. -Trial balance is prepared. -Financial statements are prepared.}What is a ledger? {Ans: The entire group of accounts maintained