ACCOUNTING 01/06/09

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Class notes/ definitions / terms 01/06/09

Accounting

Recording, classifying, & summarizing financial information, and interpreting the results.

Proprietor

Owner of a business

Accounts

Assets, liabilities & owners equity are comprised of individual accounts like cash, loans payable, and capital.

Assets

Property that a business owns

Investment

Assets used in the business that were provided by the owner.

Liabilities

Debts owned by a business

Accounts Payable

Short term debts, owed for credit purposes

Creditors

Companies and individuals to whom money is owed

Owners Equity

Financial interest of an owner in a business

Accounting Equation

Assets = Liabilities + Owners Equity

Balance Sheet

Itemized lists of assets, liabilities and owners equity showing financial position of a business.

Business transaction

Business activities involving the exchange of 1 item of value for another.

debit

increasing asset account

credit

decreasing asset account

debit

decreasing liability / owners equity account

credit

increasing liability / owners equity account

debit

when you receive cash you...

credit

when you pay out cash you...

debit

when you pay an expense you _____ the specific expense account

Credit

when you make a sale or receive money, you ______ the revenue /fees / sales account

assets

equipment

assets

building

Assets

Accounts receivables

Assets

Land

Assets

Supplies

Assets

Building

Assets

Cash

Liabilities

Accounts Payable

Liabilities

Loans Payable

Liabilities

Mortgage Payable

Liabilities

Notes payable

Owners Equity

Capital Account

Owners Equity

Revenues / Sales / Fees

debit cash

Donation / Investment ( what would you do to assets side?)

credit capital acct

Donation / invesment (What would you do to capital account?)

FOB SHIPPING POINT

Receiver must pay shipping costs

FOB Destination

Supllier / Sender must pay shipping costs

statement of owners equity

intiial capital + additional capital (+ or -) net profit or net loss - withdrawals account

net profit

revenue exceeds expenses

Net loss

expenses exceed revenue

debit

addition of monies to a contra account

debit

addition of merchandise to be sold results in a _____ to the related merchandise exp acct

credit

a discount for purchase would result in a _______ to the purchases discount account

temporary expenses

Accounts closed at the end of each period (ex: revenue., expense, drawing acct)

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