generally accepted accounting principles
=standard accounting rules, guidelines and practices
assets are shown on the balance sheet at the cost of aquisition or construction.
period of time covered by a financial statement
in each transaction the debits must equal the credits
expenses should be recorded in the same time period as the revenue they helped to earn
business form that serves as the original source of info that a transaction has occurred
Chart of Accounts
a list of all accounts with their name and number
writing a number incorrectly (wrong order)
allocation of costs to fixed assets as they are used (decrease in value)
continuous record of inventory
physical count of inventory every certain number of time periods.
uncollectable accounts owed by customers
interpreting accounting data from condensed financial statements and predicting future results
relationship between easily convertible assets and current liabilities
=Current Assets (easy)/Current Liabilities : 1
relationship between owner's equity and total assets
=Owner's Equity/Total Assetsx100%
Principle of Objectivity
requires that all accounting records be based on objective evidence
The Business Entity Principle
each business is considered a separate unit or entity. The financial data for a business must be kept separate from personal data.
use the same period of time for consistency
items owned of value
debts of a business
A person's net worth.
money earned after expenses paid
-->increase in owner's equity
amount earned from sales of goods
costs of items or services used in the operation of the business.
Accrual Basis of Accounting
recording revenue when it is earned; recording expense when it happens
record of transactions in chronological order
main journal in a business
a business form that serves as the original source of information that a transaction has occurred
-cash sales slip
-bank credit memo
multi-column form used in preparing financial statements
Accolunts Receivable Control Account
represents the sum of all the individual accounts receivable
Accounts Payable control account
represents the sum of all the indicidual accounts payable
converted into cash or used up within 1 year
order/speed that something can be converted into cash
accounting changes recorded to ensure that account balances are correct
offset the value of another account
Straight Line Depreciation
same amount of depreciation each period
greater amount of depreciation in the early years
% of depreciation on book value
Capital Cost Allowance
method of depreciation used under the income tax act
Principle of conservatism
accountants should choose accounting methods that result in lower net income and net assets
accounts that do not carry over period to period
Receipt of Invoice
payment when invoice received
goods purchased by a merchandise company with the objective of resale
Schedule of Cost of Goods Sold
Merchandise Inventory, Dec1
Less: Purchases Returns/Allowances
Net Purchase Cost
Total Cost of Merchandise Purchased
Cost of Merchandise Avaiable for Sale
Less: Merchandise Inventory, Dec 31
Cost of Goods Sold
group of accounts of one type
recording information from the source documents directly into subsidiary ledgers
Journalizing Batch Tools
recording the total of a number of source documents of one type in a single entry
Condensed Income Statement Base Figure?
Condensed Balance Sheet Base Figures?
Current Assets/Current Liabilities:1
Accounts Receivable Collection Period
Average Accounts Receivable/Net Sales on Credit x365
Total Debt/Total Assets x100%
Rate of Return on Average Owner's Equity
Net Income/Average Owner's Equity x100%
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