Flashcards From Principles Of Accounting I Ch. 2

Front 1

Summarize the accounting process.

Back 1

1. Analyze Transaction
2. Record Transaction
3. Post Transaction

Front 2

What does it mean to analyze a transaction?

Back 2

Look at actions and see what transactions are affected.
Look at source documents e.g. pay stubs, receipts, etc.

Front 3

What is the accounting equation?

Back 3

Assets = Liabilities + Owner Equity

Front 4

Define asset.

Back 4

Anything of value that is owned or controlled by a company for any future benefit.

Front 5

Define liability.

Back 5

Any amount that you owe someone.

Front 6

Define equity.

Back 6

owner's share of assets after liability is paid.

Front 7

What is the difference between something that is "receivable" and something that is "payable"?

Back 7

Anything that says "receivable" is an asset.
Anything that says "payable" is a liability.

Front 8

Define note receivable.

Back 8

Written document with a promise to pay a specific amount on a specific date.

Front 9

Define prepaid account.

Back 9

Something that is paid in advance ala prepaid rent, services, insurance, etc.
Paid for in advance but haven't gotten the use of it yet.

Front 10

What are supplies considered until used?

Back 10

Until supplies are used, they are considered assets.

Front 11

What is a supplies expense?

Back 11

the worth of used supplies.

Front 12

Define note payable.

Back 12

promise to pay a certain amount on a certain date.

Front 13

What are the four things that can change an equity account?

Back 13

4 things change the equity account:
1. Investment Capital (+)
2. Net income (+)
3. Net loss (-)
4. Withdrawals (-)

Front 14

Define chart of accounts.

Back 14

List of all the accounts in a company, given a numerical value.

Front 15

What does a lower number mean in a chart of accounts?

Back 15

Lower the number, the more liquidity an account has.

Front 16

Define account ledger.

Back 16

Summary of all activity in an account

Front 17

Where are accounts found?

Back 17

Accounts are found in the general ledger.

Front 18

Define double entry accounting.

Back 18

For every transaction, two accounts will be affected in opposite columns.

Front 19

How does a debit or credit transaction affect the following accounts:
1. Assets
2. Liabilities
3. Capital
4. Withdrawals
5. Revenues
6. Expenses

Back 19

look at notes for diagram

Front 20

Explain what happens when office supplies are bought with $200 in cash.

Back 20

look at notes for explanation.

Front 21

Explain what happens in an account when an investment of 30,000 is made In cash?

Back 21

look at notes

Front 22

What happens in an account when $900 of debt is paid?

Back 22

notes

Front 23

Define a normal balance of account.

Back 23

What increases an account

Front 24

Define trial balance.

Back 24

Listing of accounts coming out of general ledger with balances

Front 25

Define income statement.

Back 25

Summary of return and expenses for a period of time.

Front 26

Define Statement of Owner Equity.

Back 26

Shows all amounts that will change equity for a period of time.

Front 27

Define Balance Sheet.

Back 27

List of assets, liabilities, and equity accounts at a certain point in time.

Front 28

Explain what happens in the following scenarios:
1. Invest 70,00 cash and 30,000 in equipment.
2. Purchase supplies on credit for $280
3. Receive 7,800 for services

Back 28

notes