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Accounting Basics

Basic Accounting Definitions

TermDefinition
cash The basis or method of accounting that is less effective than the accrual basis in measuring profitability.
accrual The basis or method of accounting where expenses are reported as they are incurred rather than when they are paid
receivable When a company provides a service and allows the customer to pay in 30 days, the account to be debited is Accounts _____________________.
depreciation The systematic allocation of the cost of equipment and buildings used in a business from the balance sheet to the income statement over the useful life of the asset.
equation The basic accounting ______________ is Assets = Liabilities + Owner's Equity.
transacations Accounting software facilitates recording business _______________.
prepaid The title of the asset account that reports the unexpired cost of insurance premiums that have already been paid is _____________ Insurance.
land This component of Property, Plant & Equipment is not depreciated.
point The balance sheet reports amounts that apply at a particular ____________ in time.
journal Known as the book of original entry, it lists transactions in order by date
bottom The net income of a company is sometimes referred to as the ____________ line (of the income statement).
expenses A major element of the income statement that reports the costs that have been used in order to obtain revenues during the accounting period.
payable Most liability accounts have this word as part of their title.
valuation Depreciation is an allocation technique; it is not a ________________ technique.
ledger The 'books' of the company that contains all of the accounts is the general _______________.
cost The accounting guideline that prevents assets from being reported at amounts greater than their cost is the __________ principle.
revenues A major element of the income statement that reports fees earned and sales of products.
profitability The accrual basis of accounting is more effective than the cash basis in reporting the ________________ of a business.
principles Generally accepted accounting guidelines are referred to as _______________.
balance The financial statement that reports the financial position of a company as of an instant or point in time is the ________________ sheet.
assets Resources owned by a company.
liabilities The balance sheet classification that reports the obligations of the company.
carrying The book value of an asset or liability is also known as the ________________ amount.
asset An entry to the left-side of an account.
double Because the accounting system used in the U.S. requires at least one debit and one credit, we refer to the accounting system as _____________-entry.
flows The required financial statements include the balance sheet, the income statement, and the statement of cash __________.
stockholders The owner's equity section of a corporation's balance sheet is known as shareholders equity or _______________________ equity.
conservatism In the case of two acceptable alternatives, this guideline directs the accountant to select the alternative that results in less profit and less asset (or more liability).
credit An entry to the right-side of an account.
retained One part of stockholders' equity is _____________ earnings.
income The financial statement that reports the revenues and expenses of a company for a period of time is the ________________ statement.
two Every transaction that gets recorded in the general ledger involves ______ or more accounts.
loss Some people refer to the income statement as the profit and ______ statement.
lower Sometimes inventory is reported at an amount that is __________ than cost.
unearned The title of the liability account that reports amounts that were received by the company before they were earned is ________________ Revenues.
period The income statement and the statement of cash flows report amounts covering a ___________ of time.
chart A listing of all of the accounts available in the general ledger is a __________ of accounts.
matching The accruing of expenses that pertain to the revenues being reported is required because of the ___________ principle.
matching The accruing of expenses that pertain to the revenues being reported is required because of the ___________ principle.
share If a corporation's stock is publicly traded, its net income must also be reported on the income statement as earnings per ___________.
cash The financial statement that explains how cash and cash equivalents have changed during an accounting period is the statement of ________ flows.
interim The financial statements that are issued between a company's annual financial statements are referred to as _____________ financial statements.
liabilities Amounts owed to employees and suppliers are reported as _______________ on the balance sheet.
double The accounting equation remains in balance because of __________-entry accounting.
selling SG&A is the acronym for ____________, general and administrative expenses.
principles The basic accounting ______________ include cost, matching, full disclosure, etc.
cost Generally, assets are reported at their historical ______ or less.
income The financial statement that reports revenues, gains, expenses, and losses is the _________ statement.
receivable When a sale is made on credit, it will also increase the company's Accounts ____________.
matching The accruing of expenses that pertain to the revenues being reported is required because of the ___________ principle.
share If a corporation's stock is publicly traded, its net income must also be reported on the income statement as earnings per ___________.
cash The financial statement that explains how cash and cash equivalents have changed during an accounting period is the statement of ________ flows.
interim The financial statements that are issued between a company's annual financial statements are referred to as _____________ financial statements.
liabilities Amounts owed to employees and suppliers are reported as _______________ on the balance sheet.
double The accounting equation remains in balance because of __________-entry accounting.
selling SG&A is the acronym for ____________, general and administrative expenses.
principles The basic accounting ______________ include cost, matching, full disclosure, etc.
cost Generally, assets are reported at their historical ______ or less.
income The financial statement that reports revenues, gains, expenses, and losses is the _________ statement.
receivable When a sale is made on credit, it will also increase the company's Accounts ____________.
book The cost of equipment minus its accumulated depreciation is its _________ or carrying value
payable The amounts a company owes its suppliers are reported in the account Accounts __________.
accrual The ________-basis of accounting requires that revenues be reported on the income statement when they are earned and expenses be reported when they are incurred.
generally GAAP is the acronym for _______________ accepted accounting principles.
current Cash and other assets that will turn to cash within one year of the balance sheet date are reported as _____________ assets.
period The heading of the income statement and the cash flow statement indicates the _________ of time covered by the financial statement.
balance The financial statement also known as the statement of financial position is the _________ sheet.
debit The accounting term used to describe an entry made on the left side of a T-account.
decrease A debit to a liability account will _____________ (increase, decrease) the normal balance in the account.
depreciation Allocating the cost of a long-lived asset to expense over its useful life is known as __________________.
chart A list of all of the names of the accounts in the general ledger (without account balances) is a ________ of accounts.
land A long-term asset used in a business that is not depreciated.
credit An entry on the right side of a T-account.
general The entry to record depreciation is first entered in the ___________ journal.
inventory A manufacturer's or a merchandiser's goods on hand are reported in this asset account.
expense Insurance premiums that had been paid in advance but have expired in the current period should be reported in the current period as Insurance __________.
last The inventory cost flow assumption that results in less reported profits and taxable income during years of continuously rising costs is _______-in, first-out.
equity Stockholders' ________ is the difference between a corporation's assets and liabilities
net The bottom line of the income statement is ______ income.
two The minimum number of accounts affected when each transaction is recorded.
notes The _______ to the financial statements will disclose the company's significant accounting policies.
chart A list of all of the names of the accounts in the general ledger (without account balances) is a ________ of accounts.
land A long-term asset used in a business that is not depreciated.
credit An entry on the right side of a T-account.
general The entry to record depreciation is first entered in the ___________ journal.
inventory A manufacturer's or a merchandiser's goods on hand are reported in this asset account.
expense Insurance premiums that had been paid in advance but have expired in the current period should be reported in the current period as Insurance __________.
last The inventory cost flow assumption that results in less reported profits and taxable income during years of continuously rising costs is _______-in, first-out.
equity Stockholders' ________ is the difference between a corporation's assets and liabilities
net The bottom line of the income statement is ______ income.
two The minimum number of accounts affected when each transaction is recorded.
notes The _______ to the financial statements will disclose the company's significant accounting policies.
expenses Costs that are matched with revenues in the current period.
unearned Fees that a company has received from its customers in advance of being earned are deferred to the balance sheet account ____________ Fees.
gross Sales minus the cost of goods sold is the __________ profit.
asset The type of balance sheet account used to report cost of prepaid insurance premiums that have not expired as of the balance sheet date.
 

 



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