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140 Cards in this Set

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