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Accounting CH. 1&2 Concepts

Terms in this set (45)

Ethics
Morals that guide the conduct of individuals
accounting
info system providing reports to users about financial transactions
GAAP
Generally Accepted Accounting Principles
Generally Accepted Accounting Principles (GAAP)
a set of accounting standards that is used in the preparation of financial statements, the "bible of accounting
business entities
sole proprietorship, partnership, corporation. business separate from personal
accounting equation
Assets = Liabilities + Owner's Equity
cost concept
amounts are initially recorded in the accounting records at their cost
assets
resources owned
liabilities
the debts (things owed)
Owner's Equity
the owner's claims to the assets of the business. right of owner
expense
using up of an asset
net income =
Revenues - Expenses
trial balance includes
assets, liabilities, owner's equity, revenue, expenses
business
organization that provides goods or services to earn profits
inputs
the basic resources—such as labor, money, materials, and energy
outputs
the goods and services created
profit
the object of most businesses is to earn a ________
profit
the financial gain; the difference bw the money spent on the product and the money made by selling the product
service, merchandising, manufacturing
3 types of businesses
service business
transportation and entertainment services
merchandising business
general merchandise (walmart)
manufacturing business
car companies, personal computers, etc.
managerial accounting
private accounting, provides internal users w info
financial accounting
provides external users w info for decision making needs
Gen-Purpose financial statements
type of financial accounting distributed to external users
public accounting
provide service on fee basis
private accounting
employed by companies government and nonprofit
rules of accounting in business
-identifying users
-assess users' info needs
-design accounting info needs
-record economic data ab business activities/events
-prepare reports for users
CPA
certified public accountant
CPA
met a state's education, experience, and examination requirement
fiscal year
July 1 - June 30
historical cost
how much you payed for it
assets
cash, accounts receivable, supplies, land, vehicle
liabilities
accounts payable, notes payable
Expenses & Revenue
2 types of owners equity
expenses
wages expense, rent expense, sales, interest income
"Hayley Haffey, Capital"
correct way to write the owner's equity name
Accounts Receivable
someone owes you
expense
using up of an asset
debit
identify if the following is a credit or debit:
cash
Debit
identify if the following is a credit or debit:
accounts receivable
debit
identify if the following is a credit or debit:
supplies
credit
identify if the following is a credit or debit:
fees earned
credit
identify if the following is a credit or debit:
revenue
credit
identify if the following is a credit or debit:
accounts payable
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