Acct 111

Front 1

What is the objective of accounting?

Back 1

To identify, measure, and communicate useful information for decision making.

Front 2

Revenue

Back 2

Providing a good or service to customer

Front 3

Expense

Back 3

Use up good or service while running the business.

Front 4

Asset

Back 4

Economic resources owned.

Front 5

Liabilities

Back 5

Debts or obligations

Front 6

Equity

Back 6

Net worth of the business (owners claims to assets)

Front 7

When determining which 2 or more accounts were affected by a transaction and whether they increased or decreased in value, what must we ask ourselves?

Back 7

What did we give?

What did we get?

Front 8

What do financial statements collectively reflect?

Back 8

The business’s performance and condition.

Front 9

What order must financial statements be done in?

Back 9

Income statement

Statement of Owners Equity

Balance Sheet

Front 10

What is the formula for an income statement? What does it determine?

Back 10

Revenue - Expenses = Net Income

It determines profitability Of the business over time

Front 11

What is the formula for a Statement of Owners Equity? What does it determine?

Back 11

Beginning Equity + Investments + Net Income - Withdrawals = End Equity

It determines end equity

Front 12

What is the formula for a balance sheet? What does it determine?

Back 12

Assets = Liabilities + Owner’s Equity

(Accounting Equation)

It determines financial position

Front 13

GAAP

Back 13

Generally Accepted Accounting Principles

Front 14

What information is on the 3 line heading of all income statements?

Back 14

Name of Business

Type of Document

Time Period

Front 15

Owners Equity = ?

Back 15

Net Worth

Front 16

Unearned Revenue

Back 16

Have received customer’s payment but have not provided service, so have an obligation to provide. Unearned revenue is a liability.

Front 17

What are the 3 forms of business? What do they do?

Back 17

Service: provides services

Merchandising: provides products

Manufacturing: produces products

Front 18

What are the advantages and disadvantages of sole proprietorships and partnerships?

Back 18

Disadvantage: Unlimited liability

Advantage: The business is only taxed once on the profit through the owners personal income tax return.

Front 19

What are the advantages and disadvantages to corporations?

Back 19

Advantage: limited liability

Disadvantage: Owners must pay business taxes as well taxes on dividends

Front 20

Chart of Accounts

Back 20

Lists all accounts according to the type of account (Assets, Liabilities, Equity, Revenue, Expenses). Each account type will have its own numbering system.

Front 21

Journalizing

Back 21

To record the transaction in the journal

Front 22

Posting

Back 22

To transfer a journal entry to the ledger

Front 23

What is a trial balance? What is its purpose?

Back 23

List of all ledger accounts and their balances. Purpose is to prove total debits = total credits

Front 24

Ledger

Back 24

A record that contains all of the companies accounts.

Front 25

GAAP - reporting entity

Back 25

Every business is treated separately and distinctly from its owner’s personal activities and other businesses.

Front 26

GAAP - reporting entity

Back 26

Every business is treated separately and distinctly from its owner’s personal activities and other businesses.

Front 27

GAAP - Cost Principle

Back 27

Acquired assets and services are recorded at their actual costs.

Front 28

GAAP - Going Concern Principle

Back 28

Business will continue to operate and use its assets and fulfill its commitments.

Front 29

GAAP - Revenue recognition principle

Back 29

Revenue is recognized only when earned.

Front 30

GAAP - Monetary Unit Principle

Back 30

Express transactions using units of money as a common denominator and monetary unit is stable over time

Front 31

GAAP - Monetary Unit Principle

Back 31

Express transactions using units of money as a common denominator

Front 32

GAAP - Cost Benefit Constraint

Back 32

Consider the trade off between accuracy of financial information and cost to produce it.

Front 33

A withdrawal, expense, or asset increasing is a __________ and when decreasing is a __________.

Back 33

Debit, credit

Front 34

WEAD increasing is a _________.

CLR increasing is a _________.

Back 34

Debit, Credit

Front 35

Equity is a measure of _______ _______.

Back 35

Net Worth

Front 36

Expenses are recorded when they are ________.

Back 36

Incurred

Front 37

Journal

Back 37

An accounting record where transactions are recorded in chronological order.

Front 38

What are the steps of the accounting cycle in order?

Back 38

Transaction of Event, Journalize, Post, Unadjusted Trial Balance, Adjustments, Adjusted Trial Balance, Financial Statements, Closing, Post Closing Trial Balance

Front 39

Assets should be listed in order of ________

Back 39

Liquidity

Front 40

When listing equity, _______ always goes before ________.

Back 40

Capital, Withdrawals

Front 41

What does WEAD stand for? What does CLR stand for?

Back 41

Withdrawals, Equity, Assets, Debit

Capital, Liabilities, Revenue

Front 42

What are the 5 types of accounts? What financial statement are they on?

Back 42

Balance Sheet: Assets, Liabilities, Owner’s Equity

Income Statement: Revenue, Expenses

Front 43

What GAAP are driving adjusted entries?

Back 43

Revenue Recognition Principle, Matching, and Time Period Principles.

Front 44

GAAP - Matching

Back 44

Anytime you record revenue you must pick up all related expenses so they match and net income is correct.

Front 45

GAAP - Time Period Principles

Back 45

Make sure transactions are recorded in the time period that they actually occurred

Front 46

What is the formula for calculating depreciation?

Back 46

Cost - Salvage Value/Number of Years of Life = Annual Rate

Front 47

What would be the depreciation formula for an asset that has been used for 3 months in a year?

Back 47

Cost - Salvage Value/Number of Years of Life = Annual Rate x 3 / 12

Front 48

What does accrued mean?

Back 48

Not yet recorded

Front 49

What are the 5 types of adjusting entries?

Back 49

Prepaid expenses, depreciation, Accrued (unrecorded) expenses, Accrued (unrecorded) revenues, Unearned Revenue

Front 50

Adjusting entries: How should a prepaid expense be recorded if the good or service was originally recorded as an asset?

Back 50

Dr Expense (specific account)

Cr Asset

Front 51

Adjusting entries: How should a prepaid expense be recorded if the good or service was originally recorded as an asset?

Back 51

Dr Expense (specific account)

Cr Asset

Front 52

Adjusted Entries: how should a prepaid expense be recorded if the good or service was originally recorded as an expense?

Back 52

Dr Asset

Cr expense (specific account)

Front 53

Adjusting entries: how should depreciation be recorded?

Back 53

Dr depreciation expense, name of asset

Cr accumulated depreciation, name of asset

Front 54

Adjusting entries: How should accrued expenses be recorded?

Back 54

Dr expense (specific account)

Cr payable (specific account)

Front 55

Adjusting entries: how should accrued revenues be recorded?

Back 55

Dr receivable (specific account)

Cr Revenue (specific account)

Front 56

Adjusting entries: how should Unearned revenue be recorded if originally recorded as a liability?

Back 56

Dr unearned revenue

Cr revenue (specific account)

Front 57

Adjusting entries: how should Unearned revenue be recorded if originally recorded as a liability?

Back 57

Dr unearned revenue

Cr revenue (specific account)

Front 58

Adjusting entries: how should unearned revenue be recorded if originally recorded as revenue?

Back 58

Dr revenue (specific account)

Cr Unearned revenue

Front 59

When preparing closing accounts, which are temporary accounts?

Back 59

Revenues, expenses, Owners equity

Front 60

In what order do we journalize closing entries?

Back 60

Revenue, Expenses, Income Summary, Drawings

Hint 60

REID

Front 61

When closing Income Summary Account if:

Revenue > Expenses = Net ______ (_______ balance)

Expenses > Revenue = Net _____ ( ______ balance)

Back 61

Income, credit

Loss, debit

Front 62

What is the order of accounts on a Classified Balance Sheet?

Back 62

Current Assets

Long Term Investments

Capital Assets

Intangible Assets

Current Liabilities

Long Term Liabilities

Front 63

What is the purpose of a Post Closing Trial Balance?

Back 63

Proving that debits = credits

And

Proving temp accounts have be closed to zero.

Front 64

What are classified as Current Assets?

Back 64

Cash, Short term investments, notes receivable, accounts receivable, supplies, prepaid assets

Front 65

What are classified as Long Term Investments?

Back 65

Shares in other companies, bonds of other companies, land bought on speculation, notes with maturity greater than 12 months

Front 66

What are classified as Long Term Investments?

Back 66

Shares in other companies, bonds of other companies, land bought on speculation, notes with maturity greater than 12 months

Front 67

What are classified as Capital Assets?

Back 67

Land, Buildings, Vehicles, Equipment, and Accumlated Depreciation

Front 68

What are classified as Long Term Investments?

Back 68

Shares in other companies, bonds of other companies, land bought on speculation, notes with maturity greater than 12 months

Front 69

What are classified as Capital Assets?

Back 69

Land, Buildings, Vehicles, Equipment, and Accumlated Depreciation

Front 70

What are classified as intangible assets?

Back 70

Goodwill, patents, franchise, trademark, copyright, etc

Front 71

What are classified as current liabilities?

Back 71

Payables due in next 12 months and current portion of long term liabilities

Front 72

What are classified as current liabilities?

Back 72

Payables due in next 12 months and current portion of long term liabilities

Front 73

What are classified as long term liabilities?

Back 73

Payables due after next 12 months.

Front 74

What is the order in which we would list Current Assets?

Back 74

Cash, short term investments, notes receivable, accounts receivable, supplies, prepaid assets

Front 75

What is the order of the 5 accounts listed in a Trial Balance?

Back 75

Assets, Liabilities, Equity, Revenue, Expenses

Front 76

What is a Description of Accounts?

Back 76

A separate record in which to record increases and decreases in each asset, liability, equity, revenue and expense item.

Front 77

How do you dispose of accrued expenses?

Back 77

Eliminate the liability and record the new period’s expense.

Dr Payable (prior period)

Dr Expense (new period)

Cr Cash (total amount paid)

Front 78

How do you dispose of accrued expenses?

Back 78

Eliminate the liability and record the new period’s expense.

Dr Payable (prior period)

Dr Expense (new period)

Cr Cash (total amount paid)

Front 79

How do you dispose of accrued revenue?

Back 79

Eliminate the receivable and record the new period’s revenue.

Dr Cash (total amount received)

Cr. Receivable (prior period)

Cr. Revenue (new period)

Front 80

How do you dispose of accrued expenses?

Back 80

Eliminate the liability and record the new period’s expense.

Dr Payable (prior period)

Dr Expense (new period)

Cr Cash (total amount paid)

Front 81

How do you dispose of accrued revenue?

Back 81

Eliminate the receivable and record the new period’s revenue.

Dr Cash (total amount received)

Cr. Receivable (prior period)

Cr. Revenue (new period)