Acct 211 Chap 3&4

Front 1

Accural Basis Accounting

Back 1

-GAAP allowed

-Companies record transactions in the period which events occured.

Front 2

Revenue Recongition

Back 2

Revenue should be recorded when it is earned.

Front 3

Expense Recongition

Back 3

Matches expenses to the time period when it is used.

Front 4

Adjusting Entries

Back 4

- requried when a financial statement is done

-Affects one balance sheet account and one icome statement account

Front 5

2 Types of defferals and what are they? (give examples)

Back 5

1. Prepaid Expenses: Recorded in an assests account before consumed or used. (Ex: Prepaid insurance, supplies, advertisting, rent, depreciation)

2. Unearned Revenues: Recieved and recorded as Liablities before they are earned. (money collected in advance before services provided)

Front 6

what are the 2 types of Accurals? (give examples)

Back 6

1. Accured Revenue: earned but not yet recieved or recorded. (Ex: Services have been performed but payment not yet collected)

2. Accured Expenses: Incurred but not yet paid or recorded. (Ex: Property taxes have been incurred but not yet paid or recorded)

Front 7

Adjusted Trial Balance

Back 7

- Financial Statements prepared from Adjusted Trial Balance

- Shows balances of all accounts included those adjusted

Front 8

Income Statement

Back 8

- Revenue & Expense accounts

- Calculate Net Income/Loss

Front 9

Closing Entries

Back 9

- Required for all temporary or nominal accounts

- Revenue, Expense, Drawings (R.E.D)

Front 10

What are the 4 Closing Entries?

Back 10

1. Close Revenue to Income Summary

2. Close Expense to Income Summary

3. Close Income Summary to Owners Capital

4. Close Owners drawings to Owners Capital

(Debit owners capital Credit Owners Drawings)

Front 11

Income Summary Account

Back 11

- Temporary/Nominal account

Front 12

Post-Closing Trial Balance:

Back 12

- show only real/permanent accounts

- Assets, Liablities, Owners Capital

- Balance sheet accounts can NEVER have a zero balance

Front 13

What is the Accounting Cycle? (9)

Back 13

1. Analyze business transactions

2. Journalize Transactions

3. Post to Ledger Accounts

4. Prepare a trial balance

5. Journalize & post adjusting entries

6. Prepare an adjusted trial balance

7. Prepare financial statements

8. Journalize & post closing entries

9. Prepare a post closing trial balance

Front 14

Current Assets

Back 14

Assets that a company expects to convert to cash or use up with in one year

Front 15

long term investments

Back 15

Investments in stocks or bonds of other companies held for many years

Front 16

Property, Plant, Equipment (PPE)

Back 16

Assets with long useful lives that a company is current using in the operating business.

Front 17

Intangible Assets

Back 17

Long lived assets that do not have physical substance

Front 18

Current Liablities

Back 18

Obligations that the company is to pay with in one year

Front 19

Long Term Liablites

Back 19

obligatons that a company expects to pay after the one year

Front 20

Owners Equity

Back 20

Propritorship: one capital account

Partnership: has a capital account fo each owner

Corporation: Broken into common stock and retained earnings