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140 Cards in this Set
- Front
- Back
What is accounting?
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The planning, recording, analyzing, and interpreting financial information.
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What is an accounting system?
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A planned process for providing financial information that will be useful to management.
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What are accounting records?
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Organized summaries of a business's financial activities.
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What are financial statements?
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Financial reports that summarize the financial condition and operations of a business.
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What is a service business?
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A business that performs an activity for a fee.
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What is proprietorship?
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A business owned by one person.
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What is an asset?
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Anything of value that is owned.
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What are equities?
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Financial rights to the assets of a business.
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What is a liability?
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An amount owed by a business.
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What is owner's equity?
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The amount remaining after the value of all liabilities is subtracted from the value of all assets.
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What are ethics?
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The principles of right and wrong that guide an individual in making decisions.
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What are business ethics?
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The use of ethics in making business decisions.
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What is a transaction?
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A business activity that changes assets, liabilities, or owner's equity.
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What is an account?
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A record summarizing the information pertaining to a single item in the accounting equation.
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What is an account title?
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The name given to an account.
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What are ethics?
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The principles of right and wrong that guide an individual in making decisions.
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What is an account balance?
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The amount in an account.
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What are business ethics?
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The use of ethics in making business decisions.
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What is capital?
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The account used to summarize the owner's equity in a business.
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What is a transaction?
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A business activity that changes assets, liabilities, or owner's equity.
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What is revenue?
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An increase in owner's equity resulting from the operation of a business.
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What is an account?
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A record summarizing the information pertaining to a single item in the accounting equation.
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What is sale on account?
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A sale for which cash will be received at a later date.
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What is an account title?
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The name given to an account.
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What is an expense?
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A decrease in owner's equity resulting from the operation of a business.
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What is an account balance?
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The amount in an account.
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What is capital?
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The account used to summarize the owner's equity in a business.
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What is revenue?
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An increase in owner's equity resulting from the operation of a business.
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What is sale on account?
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A sale for which cash will be received at a later date.
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What is an expense?
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A decrease in owner's equity resulting from the operation of a business.
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What are withdrawals?
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Assets taken out of a business for the owner's personal use.
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What is GAAP?
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(Generally Accepted Accounting Principles): Standards and rules that accountants follow while recording and reporting financial activities.
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What is the accounting concept: Business Entity?
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Financial information is recorded and reported separately from the owner's personal financial information.
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What is the accounting concept: Unit of measurement?
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Business transactions are stated in numbers that have common values; that ism using a common unit of measurement.
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What is the accounting concept: Realization of Revenue?
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Revenue is recorded at the time goods and services are sold (even if cash is not received at the same time).
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What is a T account?
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An accounting device used to analyze transactions.
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What is a debit?
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An amount recorded on the left side of a T account.
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What is a credit?
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An amount recorded on the right side of a T account.
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What is a normal balance?
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The side of the account that is increased.
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What is the chart of accounts?
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A list of accounts used by a business.
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What is a journal?
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A form for recording transactions in chronological order.
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What is journalizing?
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Recording transactions in a journal.
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What is an entry?
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Information for each transaction recorded in a journal.
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What is double-entry accounting?
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The recording of debit and credit parts of a transaction.
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What is a source document?
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A business paper from which information is obtained for a journal entry.
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What is a check?
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(C) A business form ordering a bank to pay cash from a bank account.
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What is an invoice?
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A form describing the goods or services sold, the quantity, and the price.
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What is a sales invoice?
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(S)An invoice used as a source documents for recording a sale on account.
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What is a receipt?
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(R) A business form giving written acknowledgement for cash received.
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What is a memorandum?
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(M) A form on which a brief message is written describing the transaction (supplies on account).
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What is calculator tape?
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(T) The source document for cash sales.
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What is accounting concept: Objective Evidence?
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A source document is prepared for each transaction.
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What is a ledger?
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A group of accounts.
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What is a general ledger?
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All accounts needed to prepare financial statements.
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What is an account number?
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The number assigned to an account.
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What is file maintenance?
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Arranging accounts in a general ledger, assigning numbers, and keeping records.
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What is opening an account?
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The Title and number on the heading of an account.
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What is posting?
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Information from a journal entry to an account ledger.
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What is proving cash?
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Comparing cash with checking balance.
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What is correcting entries?
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When you correct an error.
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What is a code of conduct?
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A statement that guides ethical behavior of a company and its employees.
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What is a checking account?
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A bank account from which payments can be ordered by a depositor.
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What is an endorsement?
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A signature or stamp on the back of a check transferring ownership.
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What is a blank endorsement?
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An endorsement consisting only of the endorser's signature.
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What is a special endorsement?
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An endorsement indicating a new owner of a check.
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What is a restrictive endorsement?
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An endorsement restricting further transfer of a check's ownership.
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What is a postdated check?
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A check with a future date on it.
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What is a bank statement?
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A report of deposits, withdrawals, and bank balances sent to a depositor by a bank.
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What is a dishonored check?
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A check that a bank refuses to pay.
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What is an electric funds transfer?
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A computerized cash payments system that uses electronic impulses to transfer funds.
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What is a debit card?
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A bank card that when making purchases automatically deducts the amount of the purchase from the checking account of the cardholder.
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What is petty cash?
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An amount of cash kept on hand and used for making small payments.
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What is a petty cash slip?
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A form showing proof of a petty cash payment.
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What is a fiscal period?
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The length of time for which a business summarizes and reports financial information.
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What is a work sheet?
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A columnar accounting form used to summarize the general ledger information needed to prepare financial statements.
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What is a trial balance?
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A proof of the equality of debits and credits in a general ledger.
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What are adjustments?
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Changes recorded on a work sheet to update general ledger accounts at the end of a fiscal period.
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What is a balance sheet?
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A financial statement that reports assets, liabilities, and owner's equity on a specific date.
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What is an income statement?
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A financial statement showing the revenue and expenses for a fiscal period.
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What is net income?
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The difference between total revenue and total expenses when total revenue is greater.
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What is net loss?
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The difference between total revenue and total expenses when total expenses is greater.
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What is Accounting Concept: consistent reporting?
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The same accounting procedures are followed in the same way for each account period.
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What is accounting concept: accounting period cycle?
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Changes in financial information are reported for a specific period of time in the form of financial statements.
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What is accounting concept: Matching Expenses with Revenue?
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Revenue from business activities and expenses associated with earning that revenue are recorded in the same fiscal period.
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What are stakeholders?
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any persons or groups who will be affected by an action.
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What is component percentage?
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The percentage relationship between one financial statement item and the total that includes that item.
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What is accounting concept: adequate disclosure?
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Financial statements contain all the information necessary to understand a business's financial condition.
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What is accounting concept: going concern?
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Financial statements are prepared with the expectation that a business will remain in operation indefinitely.
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What is adjusting entries?
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Journal entries recorded to update general ledger accounts at the end of a fiscal period.
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What are permanent accounts?
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Accounts used to accumulate information from one fiscal period to the next
Includes: Assets, liabilities, and capital |
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What are temporary accounts?
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Accounts used to accumulate information until it is transferred to the owner's capital account.
Includes: Revenue, Expenses, income summary, and drawing They need to be CLOSED at the end of each fiscal period so that accountants can compare fiscal periods. |
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What are closing entries?
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Journal entries used to prepare temporary accounts for a new fiscal period.
Closing entries have account balances of temporary accounts that are brought to a zero balance. |
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What is a post closing trial balance?
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The trial balance prepared after the closing entries are posted.
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What is the accounting cycle?
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The series of accounting activities included in recording financial information for a fiscal period
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What is the accounting concept: Accounting period cycle?
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The series of accounting activities included in recording financial information for a fiscal period
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What is the accounting concept: matching expenses with revenue?
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Revenue from business activities and expenses associated with earning that revenue are recorded in the same fiscal period.
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What is the accounting concept: adequate disclosure?
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Financial statements contain all the information necessary to understand a business's financial condition.
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What is merchandise?
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Goods that a merchandising business purchases to sell.
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What is a merchandising business?
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A business that purchases and sells goods.
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What is a retail merchandising business?
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A merchandising business that sells to those who use or consume the goods.
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What is a wholesale merchandising business?
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A business that buys and resells merchandise to retail merchandising businesses.
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What is a corporation?
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An organization with the legal rights of a person and which many people may own.
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What is a share of stock?
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A unit of ownership in a corporation.
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What is capital stock?
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the total shares of ownership in a corporation.
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What is a stockholder?
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An owner of one or more shares of a corporation.
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What is a special journal?
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A journal used to record only one kind of transaction.
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What is cost of merchandise?
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The price a business pays for goods it purchases to sell.
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What is a markup?
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The amount added to the cost of merchandise to establish the selling price.
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What is a vendor?
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A business from which merchandise is purchased or supplies or other assets are bought.
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What is a purchase on account?
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A transaction in which the merchandise purchased is to be paid for later.
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What is a purchases journal?
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A special journal used to record only purchases of merchandise on account.
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What is a special amount column?
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A journal amount column headed with an account title.
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What is a purchase invoice?
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An invoice used as a source document for recording a purchase on account transactions.
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What are terms of sale?
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An agreement between a buyer and a seller about payment for merchandise.
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What is a cash payments journal?
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A special journal used to record only cash payment transactions.
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What is a cash discount?
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A deduction from the invoice amount, allowed by a vendor to encourage early payment.
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What is a purchases discount?
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A cash discount on purchases taken by a customer.
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What is a general amount column?
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A journal amount column that is not headed with an account title.
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What is the list price?
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A business's printed or catalog price.
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What is a trade discount?
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A deduction in the list price granted to customers. It is usually offered if we buy from a vendor in big quantities.
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What is a contra account?
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An account that reduces a related account on a financial statement.
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What is cash short?
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A petty cash on hand amount that is less than a recorded amount.
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What is cash over?
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A petty cash on hand amount that is more than a recorded amount.
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What are purchases returned?
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Credit allowed for part of the purchase price of merchandise that is not returned, resulting in a decrease in the customer's accounts payable.
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What are purchases allowance?
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Credit allowed for part of the purchase price of merchandise that is not returned, resulting in a decrease in the customer's accounts payable (damaged merchandise)
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What is a debit memorandum?
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A form prepared by the customer showing the price deduction taken by the customer for returns and allowances.
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What is the accounting concept: historical cost?
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The amount a business pays for merchandise or other goods is recorded.
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Why is accounting so important to businesses?
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Inaccurate accounting records often contribute to business failure and bankruptcy of the business.
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How do assets have value?
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they can be used either to acquire other assets or to operate a business.
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What are the two types of equity?
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Equity of those to whom money is owed and the equity of the owner.
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What does the cash account summarize?
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The amount of cash a business has in its bank account.
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Why is insurance coverage considered an asset?
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Because it is something of value owned.
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What typer of account are purcahses classified as?
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Cost account
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What type of an account is purchases, permanent or temporary?
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Temporary
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What type of cash payments would have a source document as a memorandum?
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Bank service charge
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Why don't accountants make a journal entry for the amount of trade discounts?
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Because of the accounting concept: historical cost.
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If you were speaking aloud, 2/10 n/30, how would it be spoken?
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Two ten, net thirty
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If you need to continue transactions on another page of a journal, what do you write in the account title column at the bottom of the page?
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Carried forward?
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When transactions are continued to the top of the next journal page, what do you write in the account title column?
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Brought forward?
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Why is it better to use the Purchases Returns and Allowance account rather than to just credit the account purchases?
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A business can track the amount of purchases returns and allowances in a fiscal period if separate accounts are used for recording.
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