Fundamental Accounting Concepts

Front 1

A tool used for recording, reporting, and evaluating economic events and
transactions that affect business enterprises.

Back 1

Accounting

Front 2

What are the five activities associated with tracking
financial information?

Back 2

1) Collecting and recording of data.

2) Classifying the data.

3) Processing of data. (calculations and summaries)

4) Maintaining and storing the results.

5) Reporting the results.

The primary vehicle for these activities is the financial statement

Front 3

The elements of accounting are consider as what?

Back 3

Building Blocks of Financial Statements

Front 4

The Financial Accounting Standards Board (FASB), primary
financial elements directly related to measuring performance and financial position are as follows:

Back 4

a) Assets:

b) Comprehensive Income:

c) Distribution to Owners:

d) Equity-residual interest:

e) Expenses:

f) Gains:

g) Liabilities:

h) Losses:

i) Revenues:

Front 5

Probable future economic benefits obtained or controlled by a particular entity as a result of past transactions.

Back 5

Assets

Front 6

Change in equity (net assets) of an entity during a given period as a result of transactions and other events and circumstances from non-owner sources.

Back 6

Comprehensive Income

Front 7

Decreases in equity (net assets) of an organization that result from transferring assets, rendering services, or incurring liabilities to owners.

Back 7

Distribution to Owners

Front 8

The assets of an entity that remain after deducting liabilities. In a business entity, equity is the ownership interest.

Back 8

Equity-residual interest

Front 9

Events that expend assets or incur liabilities during a period from delivering or providing goods or services and carrying out other activities that constitutes the entity’s ongoing major or central operation.

Back 9

Expenses

Front 10

Increases in equity (net assets) from peripheral or incidental transactions.

Back 10

Gains

Front 11

Probable future sacrifices of economic benefits arising from present obligations to transfer assets or provide services to other entities in the future as a result of past transactions or events

Back 11

Liabilities

Front 12

Decreases in equity (net assets) from peripheral or incidental transactions of an entity and from all other transactions, events, and circumstances affecting the entity during a period.

Back 12

Losses

Front 13

Revenues including inflows or other enhancements of assets, settlements of liabilities, or a combination of both during a period from delivering or producing goods, rendering services, or conducting other activities that constitute the entity’s ongoing major or central operations.

Back 13

Revenues

Front 14

Source Document

Back 14

A business paper from which information is obtained for a journal entry.

Front 15

Journal

Back 15

A form for recording transactions in chronological order.

Front 16

Memorandum

Back 16

A form on which a brief message is written describing a transaction

Front 17

General - Debit and General Credit

Back 17

All are known as general amount columns.

Front 18

Sales - Credit, Cash - Debit and Cash - Credit

Back 18

All are known as special amount columns.

Front 19

Receipt

Back 19

A business form giving written acknowledgement for cash received.

Front 20

Double-Entry Accounting

Back 20

The recording of debit and credit parts of a transaction.

Front 21

Entry

Back 21

Information for each transaction recorded in a journal.

Front 22

Special Amount Columns

Back 22

A journal amount column headed with an account title.

Front 23

Proving Cash

Back 23

Determining that the amount of cash agrees with the accounting records

Front 24

General Amount Columns

Back 24

A journal amount column that is not headed with an account title

Front 25

Journalizing

Back 25

Recording transactions in a journal.

Front 26

Check

Back 26

business form ordering a bank to pay cash from a bank account.

Front 27

Claims on assets

Back 27

Claims on assets are something the company owes or owners' claims on the company.

Front 28

Owners' Equity

Back 28

Claims of owners against the business
Assets minus liabilities.

Front 29

Assets:

Back 29

Something the company owns.

Front 30

Liabilities:

Back 30

Items that a company owes, i.e. accounts payable.

Front 31

Debits

Back 31

Increases in Assets

Decreases in Claims

Expense Items

Front 32

Credits

Back 32

Decreases in Assets

Increases in Claims

Revenue Items

Front 33

Balance Sheet

Back 33

A statement detailing what a company owns (assets) and claims against the company (liabilities and owners' equity) on a particular date

Front 34

Common Stock (Share Capital), Retained Earnings (Revenue Reserves), Drawings

Back 34

Stockholders' Equity Accounts

Front 35

trial balance

Back 35

Trial balance is a list of the active general ledger accounts with debit and credit balances

Note:

A balanced trial balance does not guarantee that there are no errors in the nominal ledger entries

Front 36

Sales Revenue, Sales Returns & Allowances, Sales Discounts, Interest Income,

Back 36

Revenue Accounts

Front 37

Purchases and sales Expense All sales Expense Purchase Returns & Allowances

Back 37

Cost of Goods Sold Accounts

Front 38

Fixed assets

Back 38

Buildings, land, and equipment etc.

Front 39

Liquidity of assets

Back 39

Nearness to cash
(For this reason cash is the first item on the balance sheet.)

Front 40

Liquidity Claims on assets

Back 40

Refers to how quickly the claim against the company matures. ie.
Intermediate, and then long-term liabilities

Front 41

Income Statement

Back 41

Shows a firm's revenues and expenses, and taxes associated with those expenses for some financial period.

Front 42

Accounts Payable (Creditors), Credit Cards, Tax Payable, Employment Expenses Payable, Bank Loans,

Back 42

Liability Accounts

Front 43

Earnings Per Share (EPS)

Back 43

EPS=net income divided by the number of shares of common stock outstanding

Front 44

Cash, Bank Accounts, Accounts Receivable (Debtors), Prepaid Expenses, Inventory (Stock on Hand), Land, Buildings, Vehicles & Equipment, Investments & Stocks, Accumulated Depreciation and Other Assets

Back 44

Asset Accounts