Chapter 2

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Terms in this set (46)
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True or false: A economic event is any event that directly impacts the financial position of the company.
External and internal
What two types of economic events are there?
Claims to resources
Resources =?
liabilities, equity
Claim on resources are either creditors (___) or owners (___)
paid-in capital
Common stock is under
User's perspective
The accounting equation framework focuses on which perspective
Increases
When liabilities are credited it
Decreases
When liabilities are debited it
Decreases
When shareholders equity is debited it
Increases
When shareholders equity is credited it
DecreasesWhen paid in capital is debited itIncreasesWhen paid in capital is credited itDecreasesWhen retained earnings is debited itIncreasesWhen retained earning is credited itDecreasesWhen revenue/gains is debited itIncreasesWhen expenses/losses are debited itDecreasesWhen expenses/losses are credited itIncreasesWhen dividends are debited itDecreasesWhen dividends are credited itIncreasesWhen revenue/ gains is credited itExpensesCOGS is underGeneral ledgerThe ______ is where we track all the activity within a company's accountsAssets, liabilities, paid in capital and retained earningsPermanent accounts consist ofRevenues/gains, expenses/losses, and dividendsTemporary accounts consist oftemporary accountA accumulated balance in a account during a period but then are closed or zeroed out at the end of the periodAssets100sLiabilities200sPermanent shareholders equity300sRevenues/ gains400sExpenses/losses500sDividends600sTrueTrue or false: the collection of amounts posted to the general ledger provides an unadjusted trial balanceFalseTrue or false: There is not a order in the presentation of balancesAssets, liabilities, permanent equity, revenue, expenses and dividendsWhat is the order in the presentation of balancesPrepayments(or deferrals), accruals, estimatesWhat are the three types of adjusting entries?Prepayment (deferrals)A prepayment is when a cash flow precedes either the expense or revenue recognitionSupplies expenseBuy now use supplies laterUnearned RevenueA customer pays now but receives the service laterPrepaid expenses (prepayments)A future economic benefit (asset) over time that benefit is consumedDeferred RevenueConceptually a deferred revenue creates a future economic sacrifice (liability)OperatingDay to day activitiesInvestingBuying and selling non current assetsFinancingTransactions with creditors and debtors (other than interest payments)Gross profitSales revenue minus COGS =Operating incomeGross profit - total expenses =Net IncomeOperating income- other income expenses=