Term
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Definition
List of all accounts with their balance
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| basic summary device of all accounting |
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Definition
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| What accounts appear on a balance sheet? |
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| cash, reveivables, payables |
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| What accounts appear on an income statement? |
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Definition
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| Sequence for recording transactions and preparing financial statements |
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Definition
| journal, ledger, trial balance, financial statements |
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Definition
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Definition
assets
liabilities
owner's equity
revenues
expenses |
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Definition
| economic resources that provide a future benefit for a business |
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Definition
cash
accounts and notes receivables
inventory
prepaid expenses
land
buildings
equiptment
furniture and fixtures |
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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. |
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| 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. |
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| company’s promise to pay a debt arising from a credit purchase of inventory or from a utility bill appears in the Accounts payable account. |
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| 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. |
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Term
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Definition
Liability for an expense you have not yet paid
Ex. Interest payable and Salary payable, Income tax payable |
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Definition
common stock
retained earnings
dividends
revenues
expenses |
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Definition
| this account shows the owners’ investment in the corporation. The corporations receives cash and issues common stock to its stockholders. A company’s common stock is its most basic element of equity. All corporations have common stock. |
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this account shows the cumulative net income earned by a corporation over its lifetime, minus its cumulative net losses and dividends.
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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. |
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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. |
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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.
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| rules of debit and credit |
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Definition
ALORE
DCCCD
Divedends, Expenses
DD |
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Term
| There is a net loss when .. |
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Definition
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| 3 categories of balance sheet |
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Definition
| assets, liabilities, owner's equity |
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| categories of an income statement |
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Definition
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Term
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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. |
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Definition
| records only cash transactions; cash receipts and cash revenues; ignores important information |
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| Cash receipts are treated as.. |
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Definition
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| Cash payments are treated as.. |
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Definition
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| What does the Revenue principle deal with? |
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Definition
When to record revenue- when it's earned
The amount of revenue to record- cash value of the goods |
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Term
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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. |
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| categories of adjustments |
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Definition
| deferrals, depreciation, accruals |
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Term
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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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