Accounting - edit

  1. Accounting Equation
    Assets = Liabilities + Equity
  2. Define Assets
    Resources owned or controlled by a company "receivable"
  3. Define Liabilities
    creditor's claims on assets "payable"
  4. Define Equity
    owner's claims on assets.
  5. Equity Titles
    • Owner, Capital
    • Revenues
    • Owner, Withdraws
    • Expenses`
  6. Example of Revenues
    • services provided
    • sales of products
    • facilities rented to others
    • commision from services
  7. Examples of Expenses
    • employee time
    • use of supplies
    • advertising
    • utilities
    • insurace
  8. Assets Titles
    • Cash
    • Accounts Receivable (sometimes called credit sales or sales on account)
    • Supplies (assets until used, then expenses)
    • Equipment (office equipment, store equipment, buildings, land)
    • Notes Receivable
    • Prepaid Accounts (such as prepaid insurance, prepaid rent, club memberships)
  9. Define Income Statement
    describes a company's revenues and expenses along with the resulting net income or loss over a period of time due to earnings activities
  10. Define Statement of Owner's Equity
    explains changes in equity from net income (or loss) and from any owner investments and withdrawals over a period of time
  11. Define Balance Sheet
    describes a company's financial position (types and amounts of assets, liabilities, and equity) at a point in time
  12. Define Statement of Cash Flows
    identifies cash inflows (receipts) and cash outflows (payments) over a period of time
  13. Image Upload 1
    Balance Sheet
  14. Image Upload 2
    Income Statement
  15. Image Upload 3
    Statement Of Cash Flows
  16. Image Upload 4
    Statement of Owner's Equity
  17. ROA Equation
    Return on Assets = Net Income / Average Total Assets
  18. GAAP
    Generally accepted accounting principles: rules and concepts that financial accounting practice is governed by.
  19. FASB
    Financial Accounting Standards Board: is the private group that sets both broad and specific principles
  20. SEC
    Securities and Exchange Commission: is the government group that establishes reporting requirements for companies that issue stock to the public.
  21. IASB
    International Accounting Standards Board: issues International Financial Reporting Standards (IFRS) that identify preferred accounting practices. Helps create more harmony among accounting practices of different countries.
  22. Objectivity Principle
    accounting information is supported by independant, unbiased evidence
  23. Cost Principle
    accounting information is based on actual cost
  24. Going-Concern Principle
    accounting information reflects an assumption that the business will continue operating instead of being closed or sold
  25. Monetary Unit Principle
    means that we can express transactions and events in monetary, or money, units.
  26. Revenue recognition principle
    provides guidance on when a company must recognize revenue
  27. Business Entity Principle
    means that a business is accounted for separately from other business entities, including its owner
  28. Sabanes-Oxley Act
    SOX, helps burb financial abuses at companies that issue their stock to the public
  29. Source Documents
    identify and describe transactions and events entering the accounting process
  30. General Ledger
    is a record containing all accounts used by a company
  31. Liabilities Titles
    • Accounts Payable
    • Note Payable
    • Unearned Revenue (examples: magazine subscriptions, gift certificates, etc)
    • Accrued Liabilities (amount owed that are not yet paid such as wages payable, interest payable, or taxes payabe)
  32. Debit
    left side. Dr.
  33. Credit
    right side. Cr.
  34. Trial Balance
    list of accounts and their balances at a point in time
  35. Debt Ratio Equation
    Total Liabilities / Total Assets
  36. Time Period Principle
    assumes that an organization's activities can be divided into specific time periods such as a month, three-month quarter, a six-month interval, or a year called accounting (reporting) periods
  37. Accrual Basis Accounting
    uses the adjusting proces to recognize revenues when earned and expenses when incured
  38. Cash Basis Accounting
    recognizes revenues when cash is received and records expenses when cash is paid
  39. Matching Principle
    aims to record expenses in the same accounting period as the revenues that are earned as a result of these expenses
  40. Adjusting Entry
    is recorded to bring an asset or liabilities account balance to its proper amount
  41. Prepaid Expense
    (Deferred) refers to items paid for in advance of receiving their benefits
  42. Plant Assets
    refers to long-term tangible assets used to produce and sell products and services. Eventually wear out.
  43. Contra Account
    is an account linked with another account, it has an oppoiste normal balance, and is reported as a subtraction from that other account's balance.
  44. Unearned Revenue
    refers to cash received in advance of providing products and services.
  45. Accrued Expenses
    refers to cost that are incurred in a period but are both unpaid and unrecorded.
  46. Accrued Revenues
    refers to revenues earned in a period that are both unrecorded and not yet receiced in cash (or other assets)
  47. Unadjusted Trial Balance
    list of accounts and balances prepared before adjustmesnt are recorded
  48. Adjusted Trial Balance
    a list of accounts and balances prepares agter adjusting entries have been recorded and posted to the ledger.
Card Set
Accounting - edit
Accounting Module One - edit