Matching Definitions with Terms
Match each definition with its related term by entering the appropriate letter in the space provided. There should be only one definition per term (that is, there are more definitions than terms).
Term
(1) Transaction
(2) Continuity assumption
(3) Balance sheet
(4) Liabilities
(5) Assets = Liabilities +
Stockholders’ Equity
(6) Note payable
(7) Conservatism
(8) Historical cost principle
(9) Account
(10) Dual effects
(11) Retained earnings
(12) Current assets
(13) Separate-entity assumption
(14) Reliability
(15) Debits
(16) Accounts receivable
(17) Unit-of-measure assumption
(18) Materiality
(19) Relevance
(20) Stockholders’ equity
Definition
A. Economic resources to be used or turned into cash within one year.
B. Reports assets, liabilities, and stockholders’ equity.
C. Business transactions are separate from the transactions of the owners.
D. Increase assets; decrease liabilities and stockholders’ equity.
E. An exchange between an entity and other parties.
F. The concept that businesses will operate into the foreseeable future.
G. Decrease assets; increase liabilities and stockholders’ equity.
H. The concept that assets should be recorded at the amount paid on the exchange date.
I. A standardized format used to accumulate data about each item reported on financial statements.
J. Amounts owed from customers.
K. The fundamental accounting model.
L. The two equalities in accounting that aid in providing accuracy.
M. The account that is credited when money is borrowed from a bank.
N. The concept that states that accounting information should be measured and reported in the national monetary unit.
O. Cumulative earnings of a company that are not distributed to the owners.
P. Probable debts or obligations to be paid with assets or services.
Q. Every transaction has at least two effects.
R. Financing provided by owners and by business operations.
S. The concept to exercise care not to overstate assets and revenues or understate liabilities and expenses.
T. Useful information has predictive and feedback value.
U. Relatively small amounts not likely to influence users’ decisions are to be recorded in the most cost-beneficial way.
V. Probable economic resources expected to be used or turned into cash beyond the next 12 months.
W. Useful information should be verifiable, unbiased, and representative of reality.