The Financial Statements quiz #8 Flashcards
The Financial Statements quiz #8
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What is the meaning of 'auditor's responsibility for financial statements'? 'Auditor's responsibility for financial statements' is to express an opinion on whether the financial statements are fairly presented. What is the meaning of 'material misstatement'? 'Material misstatement' is an error or omission in financial statements that could influence users' decisions. What is the meaning of 'fraud risk' in financial reporting? 'Fraud risk' is the risk that financial statements may be misstated due to intentional deception. What is the meaning of 'audit trail'? 'Audit trail' is a record of transactions that allows tracing from source documents to financial statements. What is the meaning of 'subsidiary ledger'? 'Subsidiary ledger' is a detailed ledger that supports a control account in the general ledger. What is the meaning of 'control account'? 'Control account' is a summary account in the general ledger that is supported by a subsidiary ledger. What is the meaning of 'trial balance'? 'Trial balance' is a list of all general ledger accounts and their balances at a specific point in time. What is the meaning of 'adjusted trial balance'? 'Adjusted trial balance' is a trial balance prepared after adjusting entries have been made. What is the meaning of 'post-closing trial balance'? 'Post-closing trial balance' is a trial balance prepared after closing entries have been made. What is the meaning of 'closing entries'? 'Closing entries' are journal entries made to transfer balances from temporary accounts to permanent accounts at the end of a period. What is the meaning of 'reversing entries'? 'Reversing entries' are optional journal entries made at the beginning of a period to simplify the recording of subsequent transactions. What is the meaning of 'permanent accounts'? 'Permanent accounts' are balance sheet accounts whose balances carry over from period to period. What is the meaning of 'temporary accounts'? 'Temporary accounts' are income statement accounts and dividends, which are closed at the end of each period. What is the meaning of 'chart of accounts'? 'Chart of accounts' is a list of all accounts used by a company in its accounting system. What is the meaning of 'general ledger'? 'General ledger' is the main accounting record containing all accounts and their balances. What is the meaning of 'journal entry'? 'Journal entry' is a record of a business transaction in the accounting system. What is the meaning of 'double-entry accounting'? 'Double-entry accounting' is a system where every transaction affects at least two accounts, maintaining the accounting equation. What is the meaning of 'debit' in accounting? 'Debit' is an entry on the left side of an account, increasing assets and expenses, and decreasing liabilities and equity. What is the meaning of 'credit' in accounting? 'Credit' is an entry on the right side of an account, increasing liabilities and equity, and decreasing assets and expenses. What is the meaning of 'normal balance' of an account? 'Normal balance' is the side (debit or credit) that increases the balance of an account. What is the meaning of 'compound journal entry'? 'Compound journal entry' is a journal entry that affects more than two accounts. What is the meaning of 'adjusting entries'? 'Adjusting entries' are journal entries made at the end of a period to update account balances before preparing financial statements. What is the meaning of 'accrued revenues'? 'Accrued revenues' are revenues earned but not yet received or recorded. What is the meaning of 'accrued expenses'? 'Accrued expenses' are expenses incurred but not yet paid or recorded. What is the meaning of 'deferred expenses'? 'Deferred expenses' are expenses paid in advance and recorded as assets until used. What is the meaning of 'deferred revenues'? 'Deferred revenues' are cash received in advance and recorded as liabilities until earned. What is the meaning of 'prepaid expenses'? 'Prepaid expenses' are payments made in advance for goods or services to be received in the future. What is the meaning of 'unearned income'? 'Unearned income' is income received before it is earned, recorded as a liability. What is the meaning of 'fiscal period'? 'Fiscal period' is the time period for which financial statements are prepared. What is the meaning of 'natural business year'? 'Natural business year' is a 12-month period ending when business activities are at their lowest point. What is the meaning of 'calendar year' in accounting? 'Calendar year' is a 12-month period beginning January 1 and ending December 31. What is the meaning of 'interim period'? 'Interim period' is a reporting period shorter than a full fiscal year, such as a quarter or month. What is the meaning of 'annual period'? 'Annual period' is a 12-month reporting period for financial statements. What is the meaning of 'operating segment'? 'Operating segment' is a component of a company that earns revenues and incurs expenses and is reviewed by management. What is the meaning of 'reportable segment'? 'Reportable segment' is an operating segment that meets certain quantitative thresholds for separate disclosure. What is the meaning of 'segment profit or loss'? 'Segment profit or loss' is the profit or loss of an individual operating segment. What is the meaning of 'segment assets'? 'Segment assets' are the assets attributable to a particular operating segment. What is the meaning of 'segment liabilities'? 'Segment liabilities' are the liabilities attributable to a particular operating segment. What is the meaning of 'intersegment transactions'? 'Intersegment transactions' are transactions between different segments of the same company. What is the meaning of 'elimination entries' in consolidation? 'Elimination entries' are journal entries made to remove intercompany transactions in consolidated financial statements.
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