Term
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Definition
| Liabilities + Stockholder's Equity |
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Term
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Definition
| Retained Earnings + Contributed Capital |
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Term
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Definition
| Beginning Retained Earnings + Net Income - Dividends |
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Term
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Definition
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Term
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Definition
| a transfer of something valuable b/w parties |
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Term
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Definition
| an internal or external “happening” that affects the company |
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Term
| Transactions and events are entered into the accounting system based on the details of related what? |
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Definition
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Term
| Monetary amounts related to the transactions and events are stored in the accounting system using what? |
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Definition
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Term
| a numbering system designed to organize accounts efficiently and effectively |
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Definition
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Term
| True or False: For each transaction/event recorded, the total dollar amount of all debits must equal the total dollar amount of all credits |
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Definition
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Term
| What side do you put debits on? |
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Definition
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Term
| What side do you put credits on? |
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Definition
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Term
| Permanent (Real) Accounts consist of what? |
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Definition
| Assets= Liabilities + Stockholder's Equity |
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Term
| For Asset Accounts what does it mean when you debit and credit something? |
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Definition
| A debit is an increase on the left side and a credit is a decrease on the right side |
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Term
| For Liability Accounts what does it mean when you debit and credit something? |
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Definition
| A debit is a decrease on the left side and a credit is an increase on the right side |
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Term
| For Stockholder's Equity Accounts what does it mean when you debit and credit something? |
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Definition
| A debit is a decrease on the left side and a credit is an increase on the right side. Stockholder's Equity Accounts contains Retained Earnings Accounts and Capital Stock Accounts (they both work the same as Stockholder's Equity Debiting and Crediting |
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Term
| Temporary (Nominal) Accounts consist of what? |
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Definition
| Retained Earnings: Revenue Accounts, Expense Accounts, and Dividend Accounts |
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Term
| Describe the debiting and credit of all four temporary (nominal) accounts: |
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Definition
Retained Earnings= Debit(Decrease)/Credit(Increase)
Expense Accounts= Debit(Increase)/Credit(Decrease)
Dividend Accounts= Debit(Increase)/ Credit(Decrease)
Revenue Accounts= Debit(Decrease)/ Credit(Increase) |
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Term
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Definition
| summarizes the results of a company’s income-producing activities for an accounting period. |
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Term
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Definition
| summarizes the results of a company’s income-producing activities for an accounting period. |
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Term
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Definition
| summarizes a company’s cash receipts and cash payments during the accounting period |
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Term
| Record daily transactions in a general and/or special journal (e.g., sales, purchases, cash receipts, or cash payments journal) |
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Definition
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Term
| Post the journal entries to the accounts in the general ledger and/or subsidiary ledgers |
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Definition
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Term
| 6 steps of an overview of accounting |
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Definition
1) Journalizing- record daily transactions
2) Posting- post the journal entries into a general ledger or subsidiary ledgers. Prepare Unadjusted Trial Balance.
3) Prepare Adjusted Trial Balance
4) Prepare Financial Statements based on the adjusted trial balance
5) Prepare and post closing entries for revenue, expense, and dividend accounts. This step (a) reduces the balance in each temporary account to zero and (b) updates the retained earnings account. Prepare post-closing trial balance
6) Prepare reversing entries if applicable |
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Term
| accrual accounting means what? |
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Definition
| a company records revenues when earned and realized (or realizable) and records expenses when incurred, regardless of cash inflows and outflows |
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Term
| True or False: In many instances, many accounts may not be up-to-date at the end of the accounting period. Therefore, a company must adjust certain accounts so that it correctly reports revenues and expenses for the period and balance sheet accounts as of the end of the period |
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Definition
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Term
| are journal entries made at the end of the period so that a company’s financial statements include the correct amounts for the current period |
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Definition
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Term
| True or False: Adjusting entries commonly affect a permanent (balance sheet) account and a temporary (income statement) account |
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Definition
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Term
| Adjusting entries can be classified into three categories: |
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Definition
1) Accrual
2) Deferrals
3) Estimated Items |
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Term
| occur when revenues and expenses are recorded before cash is received or paid out (e.g., accrued revenues and accrued expenses) |
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Definition
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Term
| occur when revenues and expenses are recorded after cash is received or paid out (e.g., unearned or deferred revenues and prepaid expenses). |
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Definition
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Term
| (e.g., depreciation and bad debt expense) |
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Definition
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Term
| are used to transfer temporary account balances (i.e., income statement accounts) to permanent accounts (i.e., balance sheet accounts) |
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Definition
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Term
| The Closing Process is generally a 4-step process: |
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Definition
1) Close Revenue/Gain Accounts to Income Summary Accounts
2) Close Expense/Loss Accounts to Income Summary Accounts
3) Close Income Summary Account to Retained Earnings Account
4) Close Dividends to Retained Earnings |
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Term
| The Closing Process is generally a 4-step process: |
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Definition
1) Close Revenue/Gain Accounts to Income Summary Accounts
2) Close Expense/Loss Accounts to Income Summary Accounts
3) Close Income Summary Account to Retained Earnings Account
4) Close Dividends to Retained Earnings |
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Term
| are optional and simplify the recording of a later transaction related to the adjusting journal entry |
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Definition
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Term
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Definition
| Purchases - Purchase Allowances and Returns - Purchase Discounts |
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Term
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Definition
| Beginning Inventory + Net Purchases - Ending Inventory |
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Term
| discount is offered for prompt cash payment. This account is a contra-inventory account |
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Definition
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Term
| – customer receives refund for damaged goods returned |
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Definition
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Term
| customer receives refund for damaged goods retained |
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Definition
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Term
| Ex. Customer returns goods: What do you do as far as debiting and crediting from a buyer's point of view |
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Definition
Debit: Accounts Payable
Credit: Purchase Returns and Allowances |
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Term
| Purchases Returns and Allowances is not a contra inventory account: True or False |
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Definition
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Term
| customer receives refund for damaged goods returned |
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Definition
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Term
| customer receives refund for damaged goods retained |
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Definition
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Term
| Ex. Customer returns goods: What do you do as far as crediting and debiting from a seller's perspective |
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Definition
| you debit Sales Returns and Allowances and you credit Accounts Receivable |
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Term
| discount is offered for prompt cash payment. The account is a contra-sales revenue account that reduces Net Sales |
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Definition
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Term
| Sales less returns, allowances, and discounts |
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Definition
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