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Exam 1
Chapters 1, 2, 3
79
Accounting
Not Applicable
09/25/2013

Additional Accounting Flashcards

 


 

Cards

Term
Income Statement
Definition
Describes a company's revenues and expenses along with net loss/income over a period of time
Term
Statement of Owners Equity
Definition
How total equity changes from the beginning of the period of time to the end
Term
Balance sheet
Definition
Describes a company's financial position at a POINT IN TIME
Term
Statement of Cash Flows
Definition
Only going to report cash inflows and cash outflows
Term
Revenues
Definition
Gross increase in equity from a company's business activities that earn income

Also called 'sales'
Term
Expenses
Definition
Outflows or using up of assets as part of operations of a business to generate sales
Term
Assets
Definition
Resources a business owns or controls that are expected to provide current and future benefits to the business

Something we own or control and provides full benefit
Term
Liabilities
Definition
Creditors claims on an organizations assets;

Involves a probable future payment of assets, products, or services that a company is obligated to make due to past transactions
Term
Owners Capital
Definition
Owners investments
Term
Owners withdrawal
Definition
Owners personal needs
Term
Accounting
Definition
information and measurement system that identifies, records, and communicates relevant, reliable, and comparable information about an organizations business activities
Term
Accounting Equation
Definition
Assets = Liabilities + Equity
Term
Accounting Equation expanded
Definition
Assets = Liabilities + Equity (Owners C, - Owners W, + revenues - expenses)
Term
Recordkeeping
Definition
Recording of transactions and events, either manually or electronically
Term
Equity
Definition
Owners claim on assets, and is equal to assets - liabilities.

Also called 'net assets'
Term
Cost principle
Definition
Accounting information is based on actual cost
Term
Revenue Recognition Principle
Definition
Have to provide product or service in order to record revenue
Term
Matching Principle
Definition
When an asset is used, expenses are recorded when revenue was recorded
Term
Full Disclosure Principle
Definition
Need to fully disclose any info that makes making a decision easier
Term
Sole Proprietorships
Definition
Business owned by one person
Term
Partnerships
Definition
Business owned by two or more people
Term
Corporations
Definition
Business legally separate from its owners

Pays for its own taxes
Term
Prepaid Expense
Definition
Decrease asset, increase expense

Resources paid for prior to receiving benefits
Term
Unearned Revenue
Definition
Decrease liability, Increase revenue

Cash received before providing services
Term
Accrued Expenses
Definition
Increase expense, Increase liability

Costs incurred in a period that are both unpaid and unrecorded.
Term
Accrued Revenues
Definition
Increase revenue, Increase asset

Revenues earned in a period that are both unrecorded and not yet received.
Term
Debits increase with

DAWE
Definition
Debits
Assets
Withdrawals
Expenses
Term
Credits increase with

CRIL
Definition
Credits
Revenues
Investments by owners
Liabilities
Term
Accrual Basis
Definition
Large companies are required to use this

Revenues are recognized when earned and expenses are recognized when incurred.
Term
Cash Basis
Definition
Small companies use this, not accepted by GAAP

Revenues are recognized when cash is received and expenses are recorded when cash is paid.
Term
Adjusting entry

Paid/received cash BEFORE expense/revenue is recognized
Definition
Prepaid expenses

Unearned revenues
Term
Adjusting entry

Paid/received cash AFTER expense/revenue is recognized
Definition
Accrued expenses

Accrued revenues
Term
Prepaid expense
Definition
Reduce asset with credit

Increase expense with debit
Term
Prepaid expenses, such as prepaid rent, are accounted for as
Definition
Insurance and supplies
Term
Depreciation
Definition
Increase expense (depreciation expense)
Decrease asset (accumulated depreciation)
Term
Unearned Revenues
Definition
Cash has already been received

Increase the revenue by crediting
Decrease the liability by debiting
Term
Accrued Expenses
Definition
Increase the expense by debiting
If job isn't done, increase the liability by crediting
Term
Account
Definition
Summary of increases and decreases to the type of asset, liabilities, revenue, or expense accounts
Term
General Ledger
Definition
Record containing all accounts for a company
Term
Accounts Receivable
Definition
Always an asset

Somebody hasn't paid me yet
Term
Accounts Payable
Definition
Purchased items from vendor but haven't paid for it
Term
Unearned Revenue
Definition
Customer has paid for item but hasn't received it
Term
Expenses
Definition
Cost I have occurred providing service to my customers
Term
Normal Balance: Office Supplies
Definition
Assets - Debit

When supplies are used, turns into expense account
Term
Normal Balance: Cash Withdrawal, Owner
Definition
Withdrawal - Debit
Term
Normal Balance: Fees Earned
Definition
Revenue - Credit
Term
Normal Balance: Wages Expense
Definition
Expense - Debit
Term
Normal Balance: Accounts Receivable
Definition
Assets - Debit

Increased by credit sales
Decreased by customer payments
Term
Normal Balance: Prepaid Rent
Definition
Asset - Debit
Term
Normal Balance: Wages Payable
Definition
Liability - Credit
Term
Normal Balance: Building
Definition
Asset - Debit
Term
Normal Balance: Owners Capital
Definition
Capital - Credit
Term
Decreases Normal Balance: Service Revenue
Definition
Revenue - Debit
Term
Decreases Normal Balance: Interests Payable
Definition
Liability - Debit
Term
Decreases Normal Balance: Accounts Receivable
Definition
Asset - Credit
Term
Decreases Normal Balance: Salaries Expense
Definition
Expense - Credit
Term
Decreases Normal Balance: Owners Capital
Definition
Capital - Debit
Term
Decreases Normal Balance: Prepaid Insurance
Definition
Asset - Credit
Term
Decreases Normal Balance: Buildings
Definition
Asset - Credit
Term
Decreases Normal Balance: Interest Revenue
Definition
Revenue - Debit
Term
Decreases Normal Balance: Owner Withdrawals
Definition
Withdrawal - Credit
Term
Decreases Normal Balance: Unearned Revenue
Definition
Liability - Debit
Term
Decreases Normal Balance: Accounts Payable
Definition
Liability - Debit
Term
Decreases Normal Balance: Land
Definition
Asset - Credit
Term
To increase land
Definition
Asset - Debit
Term
To decrease cash
Definition
Asset - Credit
Term
To increase office expense
Definition
Expense - Debit
Term
To increase fees earned
Definition
Revenue - Credit
Term
To decrease unearned revenue
Definition
Liability - Credit
Term
To decrease prepaid rent
Definition
Asset - Credit
Term
To increase notes payable
Definition
Liability - Credit
Term
To decrease accounts payable
Definition
Asset - CREDIT
Term
To increase owners capital
Definition
Capital - CREDIT
Term
To increase store equipment
Definition
Asset - Debit
Term
To record expiration of prepaid insurance
Definition
Prepaid Expense (Increase expense by debit, decrease asset by credit)
Term
To record revenue earned but not yet billed
Definition
Accrued Revenue (Increase revenue by credit, increase asset by debit)
Term
To record wages expense incurred but not yet paid
Definition
Accrued Expenses (Increase expense by debit, increase liability by credit because not yet paid)
Term
To record annual depreciation
Definition
Prepaid Expense because you have to pay for long term asset before using up (increase expense by debit, decrease asset by credit)
Term
To record revenue earned that was previously received as cash in advance
Definition
Unearned Revenue (increase revenue by credit, decrease liability by debit)
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