Acct Test
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Created by:
Austin_Jackson on September 10, 2010
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43 terms
Terms | Definitions |
|---|---|
 Inventory | Current Asset Debit Found on the Balance Sheet |
| Statement of Cash Flows | Cash Flow from Operating Activities Cash Flow from Investing activities Cash flow from Financing Net Decrease in Cash |
| Income Statement | Revenues Expenses Pre-tax income Net Income |
| Statement of retained earnings | provided from last years financials Net income is derived from income statement Retained earnings flows to Balance Sheet |
| Balance Sheet | Assets Liabilities Owners Equity (snapshot of company) |
| Correct order of financial Statements | Income Statement Statement of Cash Flows Balance Sheet Cash Flow Statement |
| Assumption Principles | Separate Entity Unit of Measure Continuity Time Period |
| Assets | Must be reported Listed in order of liquidity Current assets must be payed within 12 months |
| Asset Title List | Cash Short Term investment Accounts Recievable Notes Recievable Inventory Supplies prepaid expenses Long-Term investments Equipment land Intangibles |
| Liabilities Title List | Accounts Payable Accrued Expenses Notes Payable taxes payable Unearned Revenue* Bonds Payable |
| Expenses Title List | Cost of goods sold wages Expense Interest Expense Depreciation Advertising Insurance Income Tax |
| Revenues Title List | Sales Revenue Fee Revenue Interest Revenue Rent Revenue |
| Stockholders Equity List | Contributed Capital Retained Earnings |
| Notes | Integral part of the financial statements All financial statements should be accompanied by notes which provide the reader with supplemental information about the financial condition and results of operations of the company. Notes describe the accounting rules applied in the statements. They also offer additional details about various accounts in the statements |
| Audit | independent examination of the financial statements of an entity to ensure that they represent what they claim and conform to GAAP. the purpose of an audit is to lend credibility to financial statements and ensure policies have been followed. |
| Account | a standardized format that organizations use to accumulate the dollar effect of transactions on each financial statement item |
| Chart of Accounts | index/listing of all accounts used |
| T Account | tool for summarizing transaction effects for each account, determining balances, and drawing inferences about a company's activities |
| Dual Effects Concept | idea that every transaction has at least 2 effects on the accounting equation |
| Journal | Chronological listing of transactions |
| Journal Entry | accounting entry to express the effect of transactions using debits and credits |
| Compound Journal Entry | entry that affects at least 2 debits or 2 credits |
| ledger | group of accounts |
| DADDE | Debit Assets Draws Dividend Expenses |
| CLEAR | Credit Liabilities Equity and Revenues |
| Know this **** | To remember which accounts debits increase and which accounts credits increase, recall that a debit (left) increases asset accounts because assets are on the left side of the accounting equation (A = L + SE). Similarly, a credit (right) increases liability and stockholders' equity accounts because they are on the right side of the accounting equation. |
| Operating Cycle | time it takes to pay cash to suppliers, sell goods, and provide service to customers. Shortening this increases cash flow |
| Revenue | Carries Credit balance increase net income and owners equity |
| Revenue Recognition Policy | oDelivery hasoccurred (title has passed) or services have been rendered oPayment/collection is reasonably assured (cash/is the customer creditworthy?) o Price is fixed or readily determinable oAn arrangement for payment by the customer exists (terms) |
| Matching Principle | costs incurred to generate revenues be recognized in the same period - matching of costs with benefits. |
| Expenses | decreases in assets or increases in liabilities from ongoing operations incurred to generate revenues during the period; carry debit balances; decrease net income and subsequently stockholder's equity |
| Expenditures | cash outflow for any purpose |
| gains | increase in assets or decrease in liabilities. carry credit balances. from peripheral transactions |
| losses | decrease in assets or increase in liabilities. carry debit balances. from peripheral transactions. |
| cash basis | adequate for internal reports. revenue recorded when cash is received and expenses are recorded when cash is spent |
| accrual basis | adequate for external reports. o Revenue recognized when earned (regardless of cash movement) o Expenses recorded when incurred (regardless of cash payment) o Receipt or payment of cash does not matter |
| Revenues | debit-increases credit-decreases |
| Costs and Expenses | credit increases debit decreases |
| accounting | system that collects and processes financial information for external decision makers |
| players | managers creditors investors owners |
| operations | customers supplies |
| financial accounting | periodic financial statements. used by external users |
| managerial accounting | detailed plans and continuous reports. used by internal users |
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