Accounting 2 Flashcards
accounts receivable
- business has right to the property until customer pays it off
- money owed to business from customer purchasing items on credit/on account
- ex. boscov’s customer using charge card
cash or goods used to generate income either by investing in a business or a different income property
capital
depreciation
decrease in value of property as it becomes old and gradually wears out
assets
something a business or person owns of value
liquid asset
asset that can easily be converted to cash
What is the asset equation?
Assets = Liabilities + Owners Equity
liability
- money you own for something - ex. car loan, mortgage
- buy now pay later
examples of notes payable
mortage payable
taxes payable
examples of items that appreaciate
house
land
antiques
items available for sale
inventory
exampes of items that depreciate
cars
electronics
computers
cash
all monetary items
ex. bank deposits, currency, coins, checks, money orders
economic event that causes a change in assets, liabilities or owner’s equity
business transaction
inventory
- items available for sale (on shelves or in backrooms)
- ex. best buy’s tvs in store
general incrase in value of property that occurs over time
appreciation
financial claim
who has the right to use something
ex. taking away your car by bank if you do not pay loan
double entry accounting
where each transaction affects at least 2 accounts
subdivision under assets, liabilities or owner’s equity that summarize charges and shows balance for a specific item
account
what goes under liabilities column
accounts payable
what goes under assets column
- supplies
- cash in bank
- inventory
- equipment
- account receivable
- anything that can be converted to cash
- accounts
account
subdivision under assets, liablities or owner’s equity that summarize charges and shows balance for a specific item
owners equity
value of owner’s investment
accounts receivable
- aka A/R
- money owed to businesses from customers purchasing items on credit or on account
appreciation
general increase in value of property that occurs over time
examples of assets
car, house, suitcases, perfume, airplanes
anything of value a business or person owns and controls
property
where each transaction affects at least 2 accounts
double entry accounting
examples of office supply
computer
copier
pens
pencils
stapler
etc
written promise to pay money owed at specified times
notes payable
value of owner’s investment
owner’s equity
accounts payable
- purchasing on account
- purchasing goods and or services on account
- ex. target purchased cheetos inventory from frito-lay on account
property
anything of value a business or person owns and controls
business transaction
economic event that causes a change in assets, liabilities or owners equity
ex. buy a movie ticket - your assets decrease (cash) and the theaters assets increase
who has right to use something, legal right to property
financial claim
notes payable
- aka promissory note
- written promise to pay money owed at specified times
what goes under owners equity
- revenue +
- expense -
- owner’s name and capital
money owed to businesses from cusotmers purchasing items on credit/on account
accounts receivable
capital
cash or goods used to generate income either by investing in a business or a different income property
money owed to businesses from customers purchasing items on credit or on account
accounts receivable
purchasing on account
accounts payable
decrease in value of a property as it becomes old and gradually wears out
depreciation
money you owe for something
liability
something a business or person owns of value
assets
