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33 Cards in this Set
- Front
- Back
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3 activities in the accounting process (in order) |
1. Identiy 2. Record 3. Communication |
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Economic Event |
Transaction |
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Internal Vs. External |
In--> anyone w/in company Ex--> anyone who does not work w/in company |
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GAAP |
General accepted accounting principle |
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Historical Cost principle |
Acquired are RECORDED at cost |
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Fair value principle |
Assets REPORTED at fair value |
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Monetary unit assumption |
Accounting records that only include data that can be expressed in monetary terms |
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Economic entity assumption |
Activities of entry remain separate and distinct from those of the owners |
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Sole proprietorship |
Owed and operated by 1 person |
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Partnership |
Owned and operated by 2 or more people |
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Corporation |
Ownership divided into transferrable shares of stock |
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Basic accounting equation (expanded) |
Assets=Liabilities+Owner Capital-Owner Drawings+Revenue-Expense |
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Examples of asset accounts |
Accounts recieveable Cash Inventory Equipment Supplies |
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Examples of liability accounts |
Account payable Note payable Salary payable Anything ending with payable |
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Example of Revenue accounts |
Sales revenue Service revenue Performing a service Sale of merchandise Lending money (interest & dividends) |
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Examples of expense account |
Rent expense Salary expense Untilies expense |
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What does a balance sheet show? |
Assets, liabilities & Owners equity at a specific date in time |
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What does an income statement show? |
Revenue and expenses for a specific period of time |
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What does an owners equity statement show? |
Beginning owner investment, additional investment, net income/loss, drawings, shows charges in owner equity for specific period of time |
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Debit is what side? |
Left |
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Credit is what side? |
Right |
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What does the normal balance equal? |
The side of the account that increases the account |
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Does debit or credit increase for an assets account |
Debit |
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Does debit or credit increase for a liability account |
Credit |
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Does debit or credit increase for an owner capital account |
Credit |
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Does debit or credit increase for an drawings account |
Debit |
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Does debit or credit increase for an revenue account |
Credit |
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Does debit or credit increase for an expense account |
Debit |
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What is journalizing? |
Entering transaction data in the general journal |
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What is the double entry accounting system? |
Amount of debit must equal the amount of credit |
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What is the chart of accounts? |
List of accounts and account numbers |
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What is posting? |
Procedure of transferring journal entries to the general ledger |
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What is a trial balance? |
List of accounts and balances at any given time In the order of assets, liabilities, capital, drawings, revenue, expense Debits must equal credits |
