Each of the following statements may (or may not) describe one of these technical terms. For each statement, indicate the accounting term described, or answer “None” if the statement does not describe any of the items. The accounting principle intended to assist users in interpreting financial statements. A term used to describe a company’s ability to pay its obligations as they come due. A term used in reference to accounts that are closed at year-end. A term used in reference to accounts that are not closed at year-end. A document prepared to assist management in detecting whether any errors occurred in posting the closing entries. A policy decision by a corporation to distribute a portion of its income to stockholders. The process by which the Retained Earnings account is updated at year-end. Entries made during the accounting period to correct errors in the original recording of complex transactions
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Listed below are nine technical accounting terms introduced in this chapter: Assets Liabilities Going Concerns Accounting Equation Cost Principles Liquidity Balance Sheet Inflation Owner's Equity Each of the following statements may (or may not) describe one of these technical terms. In the space provided below each statement, indicate the accounting term described, or answer "None" if the statement does not correctly describe any of the terms. Do not use a term more than once. (A.) Having the financial ability to pay debts as they become due. (B.) An assumption that a business will operate in the foreseeable future. (C.) Economic resources owned by businesses that are expected to benefit future operations. (D.) The debts or obligations of a business organization. (E.) Assets = Liabilities + Owners' Equity (F.) The principle which states that assets are valued in the balance sheet at their historical cost. (G.) A residual amount equal to assets minus liabilities.
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