Accounting 103 Flashcards
Types of Business Organizations:
1.Sole/single Proprietorship
2.Partnership
3.Corporation
4.Cooperatives
Is a form of business Organizations managed by an elected board of directors.
CORPORATION
Is a business owned and managed by one person.
Sole/Single Proprietorship
Is an association of small producers and consumers who come together voluntarily to form a business Wich they own, manage, and patronize.
COOPERATIVES
A form of business owned and managed by two or more people
PARTNERSHIP
Types of Business Activities:
Service
Trading/Merchandising
Manufacturing
Is a type of business engaged in buying and selling of goods.
Trading/Merchandising
Is engaged in the production of items to be sold. It involves the purchasing and converting of raw material to finished goods
MANUFACTURING
These are rules and procedures that serve as guide in the practice of accounting
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES(GAAP)
Comprises the methods used by a business to keep records of it’s financial activities and to summarize these accounts in periodic according reports
ACCOUNTING SYSTEM
Fundamental concepts:
1.Entity Concept
2.Periodicity
3.Going-concern
Is the concept behind providing financial accounting information about the economic activities of an enterprise for a specified time periods.
PERIODICITY
Is a concept assumes that the business enterprise will continue to operate indefinitely.
GOING CONCERN
The business enterprise as separate and distinct from its owners and from other business enterprise.
ENTITY CONCEPT
Classifications of accounting period:
A. Calendar year
B. Fiscal year
A twelve month period that starts on any month of the year than January and ends twelve months after the starting period.
FISCAL YEAR
States that all business transactions that will be entered in the accounting reports must be duly supported by verifiable evidence
OBJECTIVITY PRINCIPLE
States that income should be recognized at the time it is earned such as when goods are delivered or when services have been rendered.
ACCRUAL PRINCIPLE
Means that all properties and services acquired by the business must be recorded at their original acquisition cost
HISTORICAL COST
This refers to the relative importance of an item or event
ADEQUATE DISCLOSURE
To record returns of customers
SALES RETURNS
Discounts given to customers who pay early
SALES DISCOUNT
Amount of goods bought during the current accounting period
PURCHASES
The actual cos of merchandise that the company was able to sell.
COST OF GOODS SOLD
To record returns of customers
SALES RETURNS
Total amount of revenue that the company was able to generate from selling products.
SALES
To record early payments by the company to the suppliers.
PURCHASE DISCOUNT
The amount of inventory at the beginning of the accounting period.
BEGGINING INVENTORY
To record merchandise returned by the company to their supplier
PURCHASE RETURNS
Used to record transportation costs of merchandise purchased by the company.
FREIGHT IN
Total cost of inventory unsold at the end of the accounting cycle
ENDING INVENTORY
