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Accounting 2600 Final
Transaction Analysis, Accrual Accounting and Income, Internal Control and Cash, Short-Term Investments and Receivables, Plant Assets and Intangibles
33
Accounting
Undergraduate 3
04/23/2012

Additional Accounting Flashcards

 


 

Cards

Term
trial balance
Definition

List of all accounts with their balance 

Term
basic summary device of all accounting
Definition
account
Term
What accounts appear on a balance sheet?
Definition
cash, reveivables, payables
Term
What accounts appear on an income statement?
Definition
revenues and expenses
Term
Sequence for recording transactions and preparing financial statements 
Definition
journal, ledger, trial balance, financial statements
Term
net income=
Definition
revenues- expenses
Term
owner's equity=
Definition
assets - liabilities
Term
Order of a trial balance
Definition

assets

liabilities

owner's equity

revenues

expenses

Term
assets-
Definition
economic resources that provide a future benefit for a business
Term
list of assets
Definition

cash

accounts and notes receivables

inventory

prepaid expenses

land

buildings

equiptment

furniture and fixtures

Term
accounts receivable-
Definition
companies, sells their goods and services and receives a promise for future collection of cash. The agreement to allow customers to pay in the future is informal and usually for a short period of time.  The Accounts receivable account holds these amounts.
Term
notes receivable-
Definition
a company may receive a note receivable from a customer, who signed the note promising to pay. A note receivable is similar to an account receivable, but a note receivable is more binding because the customer signed the note. Notes receivable usually specify an interest rate.
Term
accounts payable-
Definition
companys promise to pay a debt arising from a credit purchase of inventory or from a utility bill appears in the Accounts payable account.
Term
notes payable-
Definition
includes the amounts a company must pay because it signed notes promising to pay a future amount. Notes payable, like notes receivable, also carry interest.
Term
accrued liabilities-
Definition

Liability for an expense you have not yet paid


Ex. Interest payable and Salary payable, Income tax payable

Term
list of owner's equity
Definition

common stock

retained earnings

dividends

revenues

expenses

Term
common stock
Definition
this account shows the owners investment in the corporation. The corporations receives cash and issues common stock to its stockholders. A companys common stock is its most basic element of equity. All corporations have common stock.
Term
retained earnings-
Definition


this account shows the cumulative net income earned by a corporation over its lifetime, minus its cumulative net losses and dividends.

Term
revenues-
Definition

the increase in stockholders equity from delivering goods or services to customers is called revenue.


The company uses as many revenue accounts as needed. Companies that sell merchandise use a Sales revenue account for revenue earned by selling its products.  Companies that provide services have a Service revenue account for the revenue it earns by providing services to customers. A business that loans money to an outsider needs an Interest revenue account. If the business rents a building to a tenant, the business needs a Rent revenue account.

Term
expenses-
Definition

the cost of operating a business is called expense.


Expenses decrease stockholders equity, the opposite effect of revenues. A business needs a separate account for each type of expense, such as Cost of goods sold, Salary expense, Rent expense, Advertising expense, Insurance expense, Utilities expense, and Income tax expense. Businesses strive to minimize expenses and thereby maximize net income.

Term

T-accounts-

Definition

The left side of each account is called the debit side, and the right side is called the credit side.  The debit side of an account shows what you received. The credit side shows what you gave.

Term
rules of debit and credit
Definition

ALORE

DCCCD


Divedends, Expenses

DD

Term
There is a net loss when ..
Definition
expenses exceed revenues
Term
3 categories of balance sheet
Definition
assets, liabilities, owner's equity
Term
categories of an income statement
Definition
revenue and expenses
Term
accrual accounting-
Definition
Records the impact of a business transaction as it occurs even if it receives or pays no cash.

Record revenue when earned and expenses when incurred.
Term
cash-basis accounting
Definition
records only cash transactions; cash receipts and cash revenues; ignores important information
Term
Cash receipts are treated as..
Definition
revenue
Term
Cash payments are treated as..
Definition
expenses
Term
What does the Revenue principle deal with?
Definition
When to record revenue- when it's earned
The amount of revenue to record- cash value of the goods
Term
Matching principle
Definition
Basis for recording expenses. Expenses are the costs of assets used up, and of liabilities created, in the earning of revenue. Expenses have no future benefit to the company. The matching principle includes two steps:
1. Identify all the expenses incurred during the accounting period.
2. Measure the expenses, and match expenses against the revenues earned.
To match expenses against revenues means to subtract expenses from revenues to compute net income or net loss.
Term
categories of adjustments
Definition
deferrals, depreciation, accruals
Term
deferral-
Definition
adjustment for an item in which the business paid or received cash in advance

prepaid expenses and unearned revenue require deferral adjustments.
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