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accounting 11/2010

accounting 1st quarter

QuestionAnswer
a device for recording changes (increases or decreases) in the fundimental accounting elements account
one who is concerned with the design of the system of records, the preparation of reports based upon the recorded data, and the interperatation of the reports accountant
a language of business employed to communicate financial information based upon analyzing, recording, classification summarization, reporting, and interpretation of financial data accounting
the process involved in journalizing posting to ledger taking a trial balance preparing statements making and adjusting and closing entries and preparing a post closing trial balance which is repeated each fiscal period accounting cycle
assets equal liabilities plus owners equity accounting equation
an unwritten promise to pay creditors for property such as merchandise account payable
a unwritten promise by a customer to pay at a later date for goods sold or services rendered accounts receivable
recording in each fiscal period applicable expenses, weather paid or not, and income earned accrual accounting
a trial balance taken after adjusting entries have been recorded adjusted trial balances
entries made at the conclusion of a fiscal period to bring accounts up to date adjusting entries
determining the fundamental significance of business transactions so that financial information may be properly processed analyzing
a formal financial statement illustrating the assets, liabilities, and owners equity of a business as of a specific date balance sheet
one who is involved in the process of recording financial information in a prescribed manner bookkeeper
the cost of a fixed asset minus the accumulation depreciation book value undepreciated cost
the first record of a business transaction, such as check stubs, receipts, sales invoices, purchase invoices, cash register tapes, etc. source documents
the amount by which the total assets exceed the total liabilities of a business capital owners equity
an accounting practice in which revenue is not recognized in the accounting records until received and in which expenses are not recognized until paid. cash basis accounting
a list of all the account titles and the account numbers assigned to them chart of accounts
entries made at the end of each reporting period to transfer the balances of the owners equity account. to reduce the balance to zero in preparation for the next accounting period closing entries
an accounting entry that involves more than 2 accounts compound journal entry
the account designed to accumulate totals to offset a related account contra account
the right side of a standard account credit
a condition that occurs when the total of the credits in a account is larger than the total of the debits in that account credit balance
the left side of a standard account debit
a condition tata occurs when the total of the debits in an account is larger than the total of the credits in that account debit balance
is the loss in value of a fixed asset due to wear and tear and the passage of time depreciation
that portion of the original cost of a fixed asset that is assigned as an expense to the reporting period expected to benefit from its use depreciation expense
a process of recording equal debits and credits for a single business transaction double entry accounting
a separate owners equity account in which withdrawals of cash or other assets by the owner for personal use are recorded drawing account
a decrease in assets, other than withdrawals by the owner, which result from efforts to produce revenues expense
a period of time covered by an income statement fiscal period
a book of original entry in which business transactions are recorded in chronological order general journal
the book of accounts general ledger
a formal financial statement which presents the income, expenses, and resulting net profit or net loss for a given period of time income statement
a book of accounts ledger
any debts that a business owes liabilities
the difference between gross profit an expenses when gross profit is larger net income/net profit
the difference between gross profit and expenses when expenses are larger net loss
the amount by which the total assets exceed the total liabilities of a business (an owners financial interest in a business owners equity
a work paper prepared after all the owners temporary equity accounts have been balanced and ruled, proving the = of debits and credits (last step in the accounting cycle) post-closing trial balance
the transfer of data from the journal to the ledger posting
items that are considered to be assets when acquired, but which will become expenses when consumed or expired prepaid expenses
the estimated value of a fixed asset at the end of its useful life salvage value
the first record of a business transaction ex. receipts, invoices etc. source document
a skeleton form of an account used for instructional purposes t account
accounts utilized to accumulate income, expenses and owners withdrawals for one accounting period only (closed) temporary owners equity accounts
any activity of a business enterprise that involves the exchange of values transaction
a work paper proving the equality of the debit ant credit balances in the ledger trial balance
the estimated life of a fixed asset useful life
the process in which accountants help managers develop a financial plan budgeting
a public accountant who has met certain educational and experience requirements and passed an exam certified public accountant
a type of ownership structure in which stockholders own a business. The owners risk is limited to there initial investment and the have little influence on the business decisions. corporation
(GAAP) Procedures and guidelines developed by the financial accounting standards board to be followed in the accounting and reporting process generally accepted accounting processes
a type of ownership structure in which more than one person owns a business partnership
entering financial information about events affecting the company to the accounting system recording
telling the results of the financial information reporting
a business that provides service service business
a type of ownership structure in which one person owns the business sole proprietorship
is a individual, association, or organization that engages in economic activities and controls specific and economic resources business entity
are items that are owned buy a business and will provide future benefits assets
non-business assets and liabilities are not included in the business entity concept business entity concept
assets = liabilities & owner's equity the accounting equation
is a economic event that that has direct impact on the business business transaction
the decrease in assets as a result of efforts made to produce revenues expenses
reduce owners equity as a result of the owner taking cash or other assets out of the business for personal use drawing withdrawals
reports net income or loss income statement
shows changes in the owners capital account (beginning capital & investment & net income - withdrawals = ending capital statement of owners equity
verifies the balance of accounting equation (assets = liabilities & owners equity) balance sheet
provides a description of the particular type of asset, liability, owners equity, revenue, or expense account title
any accounting period of 12 months duration fiscal year
a measure of the ease the asset will be turned into cash liquidity
another term for owners equity, the amount by which the business assets exceed the business liabilities net worth
a written promise to pay a supplier or lender a specified sum of money at a definite future time liability
this reports the profitability of business operations for a specified period of time income statement operating statement profit and loss statement
the amount a business charges for goods sold or services performed revenues
reports assets, liabilities, and owners equity for specific dates balance sheet statement of financial position or condition
reports beginning capital plus net income less withdrawals to compute ending capitlal statement of owners equity
assets are items that are owned by the business and are expected to provide future benefits true
accounts payable is an example of an asset account false
according to the business entity concept non-business assets and liabilities are not included in the business accounting records true
the equation (assets = liabilities & owners equity) must always be in balance true
when an asset increases, a liability must also increase false
when total revenues exceed total expenses, the difference is called net loss false, (net income)
expenses represent outflows of assets or increases in liabilities as a result of efforts to produce revenues true
to the left debit
to the right credit
is a list of all accounts showing the title and balance of each account trial balance
to debit an account is to enter an amount on the left side of the account true
liability accounts normally have debit balances false (liability normally have credit balances)
increases in owners equity are entered as credits true
revenue accounts normally have debit balances false (credit balances)
to credit an account is to enter an amount on the right side of the account true
a debit to a asset account will decrease it false (increase it)
normal balance is = to the plus side
a method of accounting under which revenues are recorded when earned and expenses are recorded when incurred accrual basis of accounting
journal entries made at the end of an accounting period to reflect changes in account balances that are not as a result of an exchange with an outside party adjusting entries
the difference between the asset account and its related accumulated depreciation account. the value reflected by the accounting records book value
a method of accounting under which revenues are recorded when cash is received and expenses are recorded when cash is paid cash basis of accounting
an account with a credit balance that is deducted from the related asset account on the balance sheet contra-asset
the cost of the asset that is subject to depreciation depreciable cost
a method of matching an assets original cost against the revenues produced over its useful life depreciation
a principle that requires assets to be recorded at their actual cost historical cost principle
the amount a item can be sold for under normal economic conditions market value
the principle that requires the matching of revenues earned during an accounting period with the expenses incurred to produce the revenues matching principle
assets of a durable nature that will be used for operations over several years. ex. buildings and equiptment plant assets
a depreciation method in which the depreciable cost is divided by the estimated useful life strait-line method
a form used to pull together all of the information needed to enter adjusting entries and prepare the financial statements work sheet
the matching principle in accounting requires the matching of debits and credits false revenue/expense not debits and credits
adjusting entries are required at the end of the accounting period because of mistakes in the journal and ledger false to bring accounts up to date
as part of the adjustment of supplies, an expense account is debited and supplies is credited for the amount of supplies used during the accounting period true
depreciable cost is the difference between the original cost of the asset and its accumulated depreciation false (book value) (depreciable cost = cost - salvage value)
the purpose of depreciation is to record the assets market value in the accounting records false (to match cost of the asset against revenues it will help generate)
the purpose of depreciation is to spread the cost of the asset over its useful life
depreciable cost is the difference between original cost and estimated salvage value
book value is the difference between the original cost and accumulated depreciation
the adjustment for wages earned but not yet paid is debit wages expense and credit wages payable
the first step in preparing a work sheet is to ` prepare the trial balance sheet
drawing expenses revenues temporary accounts
assets liabilities capital, owners equity permiaent accounts
this should be prepared to prove the equality of the debit and credit balances in the general ledger post-closing trial balances
the steps involved in accounting for all of the business activities during an accounting period accounting cycle
the process of giving zero balances to the temporary accounts so that they can accumulate information for the next accounting cycle closing process
a temporary account used in the closing process to summarize the effects of all revenue and expense accounts income summary
obligations that are not expected to be paid within a year and do not require the use of current assets long term liabilities
accounts that accumulate information across accounting periods; all accounts reported on the balance sheet permanent accounts
prepared after posting the closing entries to prove the equality of the debit and credit balances in the general ledger accounts post closing trial balance
accounts that do not accumulate information across accounting periodsbut are closed at the end of each month temporary accounts
expenses are listed on the income statement as they appear in the chart of accounts or in descending order (by dollar amounts) true
additional investments of capital during the month are not reported on the statement of owners equity false (additional investments are added to the beginning balance)
the income statement cannot be prepared using the work sheet alone false
a classified balance sheet groups similar items together such as current assets true
temporary accounts are closed at the end of each accounting period true
asset, cash, accounts payable, capital permanent account
revenue, drawing, expense, drawing temporary account
what is the first step in the closing process close revenue account
the_______is prepared after closing entries are posted to prove the equality of debit and credit balances post closing trial balance
steps that begin with analyzing source documents and conclude with the post closing trial balance are called the accounting cycle
Created by: 1468641782
 

 



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