Accounting Chapter 2: Analyzing and Recording Transactions

  1. source documents
    • -identify and describe transactions and events entering the accounting system 
    • -Ex. sales receipt, checks, purchase orders, bills
  2. account
    -record of increases and decreases in a specific asset, liability, equity, revenue or expense
  3. general ledger
    -is a record of all accounts used by a company
  4. assets accounts
    • -resources owned or controlled by a company
    • -have expected future benefits
    • -Ex. cash, accounts receivable, note receivable, and prepaid accounts, supplies, equipment, buildings, land
  5. liability accounts
    • -claims (by creditors) against assets, which means they are obligations to transfer assets or provide products or services to other entities.
    • -Ex. accounts payable, notes payable, unearned revenue
  6. equity accounts
    • -The owner’s claim on a company’s assets is called equity or owner’s equity.  Equity is the owner’s residual interest in the assets of a business after deducting liabilities.
    • -Ex. owner's capital, owner's withdrawals, revenue, expenses
  7. Equity equation
    =Owner's capital - Owner's withdrawals + Revenues - Expenses
  8. When an owner invests in a company, it increases both ____
    assets and equity
  9. When an owner withdraws assets for personal use, it decreases both ____
    company assets and total equity
  10. Revenues always _____equity
    increase
  11. Expenses always ______equity
    decrease
  12. T-account
    • -a ledger account
    • -used to show the effects of transactions 
    • Image Upload 1
  13. Double Entry Accounting Equation
    Image Upload 2
  14. To increase assets (debit or credit)?
    debit
  15. To decrease assets (debit or credit)?
    credit
  16. To increase liabilities (debit or credit)?
    credit
  17. To decrease liabilities (debit or credit)?
    debit
  18. To decrease equity (debit or credit)?
    debit
  19. To increase equity (debit or credit)?
    credit
  20. Normal balance for Assests
    Debit
  21. Normal balance for Liabilities
    Credit
  22. Normal balance for Equity
    Credit
  23. Normal balance for Owner, Capital
    Credit
  24. Normal balance for Owner, Withdrawals
    Debit
  25. Normal balance for Revenues
    Credit
  26. Normal balance for Expenses
    Debit
  27. Debt Ratio Formula
    =Total Liabilities/Total Assets
Author
dante01
ID
348943
Card Set
Accounting Chapter 2: Analyzing and Recording Transactions
Description
study
Updated