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Accounting
Chapter 1 and 2 Test
| Term | Definition |
|---|---|
| ROA formula | net income/total assets |
| Debt ratio | total debts/total assets |
| Income Statement | Date - Cash Flows - Cash + Land + Supplies+ Equipment = Notes Payable + Accts. Payable = Common Stock, Retained Earnings - Revenue - Expenses = Net Income |
| Four Financial Statements | 1. Income statement 2. Statement of Changes in Owners Equity 3. Balance Sheet 4. Statement of changes in cash flows |
| D.E.A.D. | Debits increase EXpenses, Assets, Dividends |
| What do credits increase? | Liabilities, Equity, Revenue |
| AE | Asset Exchange |
| AU | Asset Use |
| AS | Asset Source |
| OA | Operating Activity |
| FA | Financing Activity |
| IA | Investing Activity |
| T Account | Debits on the L, Credits on the R |
| If Assets/Expenses or Dividends go up what else goes up? | Debits |
| If Liabilities, Equity or Revenue goes up, what else goes up? | Credits |
| Matching Principle | Expenses must equal revenues |
| Accounts | Records that are kept for each asset, liability, equity, revenue, expense and dividend component of an entity |
| The Journal | the book used to record all transactions |
| Journalizing | To write a journal entry |
| Journalizing format | Debits first, flush left. Credits second, indented right. |
| The General Ledger | A record of all the accounts and their balances. |
| Trial Balance | Trying out it your debits and credits are correct. |
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ArtemisDC
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