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27 Cards in this Set

  • Front
  • Back
Payments to investors by a company
A statement that reports the amounts of assets, liabilities, and stockholders' equity of an accounting entity at a point in time.
Balance Sheet
What is the Basic Accounting Equation?
Assets = Liabilities + Stockholders' Equity.
An economic resource owned by a company.
A company's debts or obligations
The amount of financing provided by owners of the business.
Stockholders' Equity
A report of the revenues less the expenses of the accounting period.
Income Statement
A report of the way that net income and the distribution of dividends affected the financial position of the company during the accounting period.
Statement of Retained Earnings
A report of the inflows and outflows of cash during the accounting period in the categories of operating, investing, and financing
Statement of Cash Flows
In what order should assets be listed on a balance sheet?
In order of liquidity - how soon an asset is expected to be turned into cash.
What are the entities a company owes money to called?
In what order should liabilities be listed on a balance sheet?
In order of maturity - how soon an obligation can be paid.
What are "Current Liabilities"?
Obligations that will be satisfied within the coming year.
What are "Current Assets"?
Assets that will be used or turned into cash within one year. Inventory is always considered a current asset.
What is Contributed Capital?
Owner provided cash and sometimes assets.
What are Retained Earnings?
The cumulative earnings of a company that are not distributed to the owners and are not reinvested in the business.
What is "The Historical Cost Principle"?
The requirement that assets to be recorded at the historical cash-equivalent cost, which on the date of the transaction is cash paid plus the current dollar value of all noncash considerations also given in the exchange.
Make a list of asset account titles.
Cash, Accounts Receivable, Notes Receivable, Inventory, Supplies, Prepaid Expenses, Investments, Equipment, Buildings, Land, Intangibles.
Make a list of Liabilities account titles.
Accounts Payable, Accrued Expenses Payable, Notes Payable, Taxes Payable, Unearned Revenue, Bonds Payable.
Make a list of Stockholders' Equity account titles.
Contributed Capital, Retained Earnings.
Make a list of Revenues account titles.
Sales Revenue, Fee Revenue, Interest Revenue, Rent Revenue.
Make a list of Expenses account titles.
Cost of Goods Sold, Wages Expense, Rent Expense, Interest Expense, Depreciation Expense, Advertising Expense, Income Tax Expense.
!"Receivable" Accounts Hint 1!
Accounts with "receivable" in the title are always assets; they represent amounts owed by customers and others to the business"
!"Payable" Accounts Hint 2!
Accounts with "payable" in the title are always liabilities and represent amounts owed by the company to be paid to others in the future.
!"Prepaid" Accounts Hint 3!
The account 'Prepaid Expenses' is an asset since it represents amounts paid to others for future benefits, such as future insurance coverage or rental of property.
!"Unearned" Accounts Hint 4!
Accounts with "unearned" in the title are always liabilities representing amounts paid to the company from others expecting future goods or services from the company.
What are the two principles underlying the transaction analysis process?
1) Every transaction affects at least two accounts; correctly identifying those accounts and the direction of the effect (whether an increase or a decrease) is critical.

2) The accounting equation must remain in balance after each transaction.