Chapter 1 TEST A Name Perfect Score Your Score Defining Accounting Terms 27 Pts. Analyzing Accounting Practices 15 Pts. Determining How Transactions Change an Accounting Equation 48 Pts. Determining How Transactions Change an Accounting Equation 40 Pts. Total 130 Pts. Part One—Defining Accounting Terms Directions: Select the one term in Column I that best fits each definition in Column II. Print the letter identifying your choice in the Answers column. Answers 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. Column I A. account B. account balance C. account title D. accounting E. accounting equation F. accounting system G. asset H. business ethics I. business plan J. capital account K. creditor L. equities M. equity N. ethics O. expense P. financial statements Q. GAAP R. liability S. net worth statement T. owner’s equity U. personal net worth Column II 1. A formal report that shows what an individual owns, what an individual owes, and the difference between the two. 2. Planning, recording, analyzing, and interpreting financial information. 3. An equation showing the relationship among assets, liabilities, and owner’s equity. 4. A business activity that changes assets, liabilities, or owner’s equity. 5. A planned process for providing financial information that will be useful to management. 6. The standards and rules that accountants follow while recording and reporting financial activities. 7. The account used to summarize the owner’s equity in the business. 8. The amount remaining after the value of all liabilities is subtracted from the value of all assets. 9. A record summarizing all the information pertaining to a single item in the accounting equation. 10. The difference between personal assets and personal liabilities. 11. Anything of value that is owned. 12. A sale for which cash will be received at a later date. 13. Assets taken out of a business for the owner’s personal use. 14. A formal written document that describes the nature of a business and how it will operate. 15. A business owned by one person. 16. The use of ethics in making business decisions. 17. A business that performs an activity for a fee. 18. The difference between assets and liabilities. 19. Financial reports that summarize the financial conditions and operations of business. 20. An amount owed by a business. 21. A person or business to whom a liability is owed. S D E Z F Q J T A U G X AA I V