BIS127[1].txt

Cash, properties, or things of value owned by the business.

All the goodies, anything with value.

Amount the business owes to creditors.

Amounts the business owes to others.

Also called, Owner's Capital. The owners investment or net worth.

The amount by which business assets exceed business liabilities.

What the business press three owner. The good stuff left for the owner assuming all liabilities have been paid.

Consist of amount earned by a business, such as fees earned for performing services, income from selling merchandise, rent income for the use of property, or interest earned for lending money.

Also called Income.

The cost of revenue-that is, of doing business- such as wages expense, rent expense, interest expense, and advertising expense.

Also called cost.

Assets= Liabilities +Owners Equity(capital)+ revenue-expenses.

• Abbreviated or simple version:
• Property = Property Rights

• Expanded Version:
• Assets = Liabilities + Owner's Equity (Capital)

• Fully Expanded Version:
• Assets = Liabilities + beginning Owner's equity (Capital) + Additional Owner Investments + Revenues - Expenses - Draws

Additional amounts, either cash out other property, which the owner pots in his business.

Amounts the owner withdraws from his business for living and personal expenses.

• Cash, Accounts Receivable, Notes Receivable, Inventory, Office Supplies, Land, Buildings,
• Equipment, Furniture.

Accounts Payable, Notes Payable, Mortgage Payable.

Sales of Products, Sales of Services, Rental Income, interest Income

Supplies, Salaries, Payroll Taxes, Advertising, Utilities, Building Rental, Maintenance & Repairs

A person who solely records accounting information

A professional with the education and experience to design an accounting system, prepare reports, and interpret their results.

• 1. Analyzing
• 2. Recording
• 3. Classifying
• 4. Summarizing
• 5. Reporting
• 6. Interpreting

An individual, association, or other organization that engages in business activities.

• 1. Assets
• 2. Liabilities
• 3. Owner's Equity

Any activity of a business that affects the accounting equation.

The actual amount paid or received is the amount recorded.

When the total revenue of the period exceeds total expenses.

When the total expenses of the period exceed total revenue.

Any accounting period of twelve months' duration.  (can also be a calendar year)

A personal expense and not a business expense.

• 1. Income Statement
• 2. Statement of Owner's Equity
• 3. Balance Sheet

Shows total revenue, total expenses, and a net income or net loss for a period of time.

*an investment or withdrawal of cash by owner is not considered a business expense and is not recognized on the income statement.

Decision to continue, expand or contract a business are often based upon information reported in the income statement.

Shows what happened to the owner's capital account during the accounting period.

Shows the assets, liabilities, and owner's equity of a business as of a specified date.

A piece of paper or source of information hat contains data that affect the business.

Example: cash receipt.

Recording the debit and then the credit of each transaction in the journal

The process of entering the journal amounts into the appropriate general ledge accounts

The have ongoing balances for one accounting period to the next.

Assets, Liabilities, Owner's Equity

Used to match this month's revenues with this expenses.

Revenue, Expenses & Drawing

List of all accounts used by a business.

• Assets: 100
• Liabilities: 200
• Owner's Equity: 300
• Revenue:400
• Expenses: 500

General Journal

Totaling the debit and credit columns of the general journal and placing small pencil footings at the bottom of each column.  Another way to check that debits equal credits.

A book of accounts that contains a separate account for each account listed in the cart of accounts

Providing a line between the journal and the ledger.  By check the ledger account, you can see where the entry was posted from. By checking the journal, you can see which account received the posting.

Used to describe the steps involved in accounting for all the business activities during a time period.

• 1) Analyze source documents
• 2) Journalize transactions in the general journal.
• 3) Post transactions from the general journal to the general ledger.
• 4) Prepare a trial balance
• 5)Prepare a work sheet.
• a) Analyze adjustments and enter onto the work sheet.
• b) Complete the work sheet.
• 6) Prepare the financial statements, using the work sheet as a guide.
• 7)Journalize and post adjusting entries, using the work sheet as a guide.
• 8) Journalize and post closing entries, using the work sheet as a guide.
• 9) Prepare a post-closing trial balance.

Lists all the accounts from the general ledger that have a balance or will have a balance after the adjusting entries are entered.

Work Sheet is NOT a financial statement.  Normally prepared in pencil.

Entries needed in order to bring certain accounts up to date.

States that the amount of revenue earned during an accounting period must be matched with the expenses incurred to generate that revenue.

All adjusting entries will affect one balance sheet account title and one income statement account title.

All revenue and expense accounts appear in the INCOME STATEMENT columns

All other account, including the owner's drawing account, appear in the BALANCE SHEET column

The process of allocating the cost of a depreciable asset over its useful life.

Revenue and expenses are recognized when earned or incurred, regardless of when cash is received or paid.

Revenue and expenses are recognized only when cash is received or paid.

Statements covering less than a year.

An offsetting or opposite account and should be deducted from the related asset account.

The difference between the asset account and its related accumulated depreciation (contra asset amount)

Connecting link between the income statement and the balance sheet.

Assets that will be used up with a year.

Listed in liquidity order.

Cash, Accounts Receivable, Supplies, Prepaid Insurance

How quickly the current asset can be converted into cash or can be used up as an expense.

Assets that will last more than one year.

Debts that will be paid in less than a year.

Debts that will be paid after one year or more.

A general journal entry to record an end-of-period adjustment to an account.

Increases or decreases to accounts that are indicated on the work sheet at the end of the accounting period.

Used to accumulate balances to list income and expenses for the period.

The process of reducing temporary accounts to zero balances.

A temporary account used only for the closing procedure.

Called Expense and Revenue Summary, Profit and Loss Summary, or Profit and Loss.

General Journal entries that close out (zero out) the balances of all temporary owner's equity accounts.

The general ledger accounts with balances after the closing entries are journalized and posted.

A listing of all general ledger accounts that remain open (permanent accounts) after the closing process is complete (journalized and posted).

Earned but not yet paid

Used to eliminate balances in asset or liability accounts so that entries made in subsequent accounting periods will be correct without considering balances caused by adjusting entries.

Cash and cash items received by a business

Involves the methods designed to safeguard assets.

Includes checks, drafts, credit card receipts, and money orders that have not yet been deposited in the bank.

Cash and cast items paid by a business.  Payments may be made in cash or by check.

Bank Account

A special ledge account which is used to keep track of daily shortages and overages of cash.

Classified as an asset and appears in the balance sheet as a current asset.

A fund to pay small or little items

A formal record of all payments from the petty cash fund.

A card kept on record completed and signed by each person authorized to sign checks.

Summarized the count of coins, currency, and checks being deposited.

Consists of stamping or writing the depositor's name on the back of the check.  Two basic endorsements: 1) Blank and 2) Restrictive

The depositor simply signs his or her name on the back of the check.  The check is payable to any bearer.

The depositor adds words such as "ForDeposit Only" or "Pay to Laura Kramer Only".  This restricts the payment of the check.

The depositor who orders the bank to pay cash.

The bank on which the check is drawn.

The person being paid the cash.

Statement of account from the bank

Checks written by the depositor that have not yet cleared the bank for payment

Deposits recorded on the depositor's books but have not yet been received or recorded on the bank records.

Bank Charges for services such as check processing and printing.

Collections of promissory notes or charge accounts made by the bank on behalf of the depositor.  Interest may have been earned on the promissory note left for collection.

Deductions for the payment of authorized bills, such as rent or mortgage payments.

These checks were rejected b the bank because the customer (drawer) did not have sufficient funds to cover the amount.

Errors made by the bank or the depositor.

Usually expressed as an annual figure or monthly amount

Earnings that are based on the number of hours worked or units produced.

Earns a salary or wages and is under the control and direction of an employer.

One who performs a service for a fee but in not subject tot he control of those for who the service is performed.

Computing by multiplying hours worked by the hourly wage rate.

Commonly called the Federal Wage Hours Law and provides that employers must pay one and one-half times the regular rate for overtime.

Hours worked over 40 hours per week.

An amount on which no federal income tax will be withheld.

Employers who do not automated payroll accounting use this methods.

Social Security (FICA) Taxes

Amount withheld for contribution to federal programs to old-age, survivor's, and disability insurance.

A multi-column form used to collect and compute payroll data for employees.

Provides cumulative information with each new pay period.

The process of recording gross earnings of employees and their withholdings.

Levied on employers for the purpose of financing the cost of federal oversight of the state unemployment compensation program.

States have unemployment compensation laws that provide for payment of benefits to qualified unemployed workers.

Provides a tax-saving incentive to employers to stabilized employment.

Debiting an account called Payroll Tax Expense for the total payroll taxes imposed on the employer.