acct 1-2

Created by rduvall1 

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withdrawals

distributions by a business to its owners are called

equity

the difference between a company's assets and its liabilities

liabilities

creditors claims on assets of a company

rules adopted by accounting profession

1) comprised of both general and specific principles
2) knowm as generally accepted accounting principles
3)abbreviated as GAAP
4)intended to make info. in financial statements relevant, reliable, & comparable

Managerial Acct

area of of accounting aimed at serving the decision making needs of internal users

External users of Acct info include:

1)shareholders
2)customers
3)Creditors
4)gov't regulators

going-cpmcern principle

rule requires financial statements to reflect the assumption that the business will continue operating instead of being closed or sold, unless evidence shows that it will not continue

Financial Acct Standards Board

primary source of new pronouncements of acct principles at the present time

White Comp. collected 1500$ cash on its acct recv. the effect of this transactioon as reflected in the acct equation are :

total assets, total liabilities, and equity are unchanged

primary objective in financial acct?

provide financial statements to help outside decision makers analyze an org.'s activities

business entity principle

to include the personal assets and transactions of a business's owner in the records and reports of the business would be in conflict with this principle

cost principle

accounting principle that requires accting info to be based on actual cost and requires assets and services to be recorded initially at the cash or cash-equivalent amount given in exchange

Revenue Recognition Principle

rule that requires revenue to be recognized at the time it is earned

Cost Principle

Max Experience Comp. acquired a building for 500,000$, it appraised at 575,000$. cost principle would require them to record the purchase at 500,000.

revenue is properly recognized when >>>

upon completion of the sale or when services have been performed and business obtains the right to collect the $

corporation

i a legal entity separate and distinct from its owners-- stockholders, dividends...etc

Assets

resources owned or controlled by a company that are expected to yield benefits

Balance Sheet

financial statement providing information that helps users uncerstand a companys financial status, and which lists the types and amounts of assets, liabilities, and equity as of a specific date,

net Income

occurs when revenues exceed expenses

net loss

excess of expenses over revenue for a period

Assets

- economic resources owned or controlled by the business
- are expected to provide future benefits to the business
-appear on the balance sheet
-claims on them are shared btw creditors and owners

objectivity principle

means that information is supported by independent, unbiased information

accounting equation

Assets = Liabilities + Equity

Zion company has assets of $600,000, liabilities of $250,000 and equity of $350,000. It buys office equipment on credit for $75,000. The effect of this transaction include:

Assets increase 75,000$ and liabilities increase by $75,000

Statement of owners Equity

reports how equity changes over a period of time

Business Entity Principle

principle that requires every business to be accounted for separately and distinctly from its owner or owners is known as business entity principle

right side of a T-acct is

credit

general journal

record in which transactions are first recorded

accounting process begins with :

analysis of business transactions and events

source documents

are the sources of accounting information

capital account

account used to record owners investments in the business is called capital acct.

general ledger

collection of all accounts used by a business and their balances is called a general ledger

accounts receivable

promise of future receipts

unearned revenue

liabilities created when a customer pays in advance for products or services before the revenue is earned

prepaid expenses

assets that represent prepayments of future expenses

note payable

a written promise to pay a definite sum of money on a specific future date

Trial Balance

a list of all accounts and their balances used by a business

double-entry accounting

an accounting system that records the effects of transactions and other events in at least 2 accounts with equal debits and credits

The normal balance of an expense account is credit. T/F?

True

Credit is used to record :

-decrease in an expense acct
-decrease in an asset acct
-increase in an unearned rev. acct
-increase in rev. acct

debit

right hand side of the T table

account balance

difference between the total debits and total credits for an acct including beginning balance

Normally the Sales Salary Payable acct has a credit balance. T/F?

True

debit is used to

increase the balance of the owners withdrawal acct

wisconsin rentals purchased office supplies on credit. The general journal; entry made by Wisconsin rentals will include>>>>

credit to accounts payable

recorded as a debit to a prepaid expense acct

an asset created by prepayment of an expense

recorded as a credit to unearned revenue acct

a liability created by the receipt of cash from customers in payment for products or services that have not yet been delivered to customer

posting

process of transferring general journal info to the ledger

general journal

provides place for : -transaction dates -- names of accts involved --- amt of each debit and credit --- explanation of the transaction

Trial Balance is a list of all accts from the ledger with their balances at a point in time. t/F?

true

The normal balance of an expense acct is a credit. T/F?

False

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