Account 301 Quiz One

Assets

A present right of an entity to an economic benefit.

Liabilities

A present obligation of an entity to transfer an economic benefit.

Equity (or net assets)

Called shareholders' equity or stockholders' equity for a corporation, it is the residual interest in the assets of an entity that remains after deducting its liabilities.

Investments by owners

Increases in equity of a particular business enterprise resulting from transfers to it from other entities of something of value to obtain or increase ownership interests in it.

Distributions to owners

Decreases in equity of an entity resulting from transferring assets, rendering services, or incurring liabilities by the entity to owners.

Comprehensive income

The change in equity of a business enterprise during a period from transactions and other events and circumstances from nonowner sources. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners.

Revenues

Inflows or other enhancements of assets of an entity or settlements of its liabilities (or a combination of both) from delivering or producing goods, rendering services, or carrying out other activities.

Expenses

Outflows or other using up of assets of an entity or incurrences of its liabilities (or a combination of both) from delivering or producing goods, rendering services, or carrying out other activities.

Gains

Increases in equity (net assets) from transactions and other events and circumstances affecting an entity except those that result from revenues or investments by owners.

Losses

Decreases in equity (net assets) from transactions and other events and circumstances affecting an entity except those that result from expenses or distributions to owners.

Economic entity

a business's financial activities must be kept strictly separate from the personal activities of its owners and from other distinct business entities.

Going concern

assumes a business will continue operating indefinitely unless there is evidence suggesting otherwise.

Periodicity

allows a company's ongoing life to be divided into artificial time periods to provide timely financial reports (yearly financial reports).

Monetary unit

requiring financial transaction elements to be measured and reported in a standard currency unit (such as the U.S. dollar or euro) without adjusting for changes in purchasing power or inflation.