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28 Cards in this Set

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Transaction
Any event that has a financial impact on the business and can be measured reliably
Assets
Cash, Accounts Receivable, Notes Receivable, Inventory, Prepaid Expenses, Land, Buildings, Equipment, Furniture, and Fixtures
Liabilities
Notes Payable, Accounts Payable, Accrued Liability
Accrued Liability
A liability for an expense that has not yet been paid by the compay. Another name for accrued Expense
Owners' Equity
Common Stock, Retained Earnings, Dividends, Revenues, Expenses
Time-Period Concept
Ensures that ccounting inormation is reported at regular intervals
Revenue Principle
The basis for recording revenues; tells accountants when to record revenue and the amount of revenue to record
Matching Principle
The basis for recording expense. Directs accountants to identify all expenses incurred during the period, to meausre the expenses, and to match them against the revnues earned during that same period.
Deferral
An adjustment for which the business paid or received cash in advance. (prepaid rent/insurance/etc)
Depreciation
Expense associated with spreading (allocating) the cost of a plant asset over its useful life
Accrual
An expense or a revenue that occurs before the business pays or receives cash. An accrual is the opposite of a deferral
Accumulated Depreciation
The cumulative sum of all depreciation expense from the date of acquiring a plant asset
Contra Account
An account that always has a companion account and whose normal balance is opposite that of the companion account
Book Value
The asset's cost minus accumulated depreciation
Accrued Expense
An expense incurred but not yet paid in cash
Closing the Books
The process of preparing the accounts to begin recording the next period's transactions. Closing the ccounts consists of journalizing an posting the closing entries to set the baliances of the revenue, expense and dividends accounts to zero.
Closing Entries
Entries that transfer the revenue, expense, and dividends balances from these respective accounts to the Retained Earnings account
Temporary Account
The revenue and expense accounts that relate to a limited period and are closed at the end of the period are temporary accounts. For a corp Dividends are also temporary
Permanent Account
Asset, Liability, and stockholders' equity accounts that are not closed at the end of the period.
Liquidity
Measure of how quickly an item can be converted to cash
Operating Cycle
Time span during which cash is paid for goods and services that are sold to customers who pay the business in cash
Classified Balance sheet
A balance sheet that shows current assets separate from long term assets, and current liabilities separate from logn term liabilites
Single Step income statement
An income statement that lists all the revenues together under a heading such as Revenues. Expenses appear in a separate category
Multi-Step income Statement
An income statement that contains subtotals to highlight important relationships between revenues and expenses
Current Ratio
Current Assets divided by curent liabilities. Measures a company's ability to pay current liabilities with current assets
Debt Ratio
Ratio of total liabilities to total assets. States the proportion of a company's asset that is financed with debt.
Contracting
Relationship between businesses when a company has an account recievable the company is contractually obligated to receive money
Normal Balances
Assets-Debit; Liabilities-Credit; Owners' Equity-Credit; Dividends-debit; Revenue-Credit; Expenses-Debit