Accounting chapter 3 flash cards

Question 1

are economic events that require recording in the financial statements

Answer 1

Transactions

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Question 2

process of identifying specific effects of economic events on the accounting equation

Answer 2

Assets=liabilities + stockholders equity

Question 3

The extended formula of the basic accounting equation

Answer 3

Assets=liabilties+stockholders equity-(common stock + retained earnings-(revenues-expenses-dividends)

Question 4

1. each transaction must affect two or more accounts to keep the basic accounting equation in balance
2. Recording done by debiting at least one account and crediting another
3. debits must = credits

Answer 4

Debit and credit procedures

Question 5

Debit balance

Answer 5

when debits are greater than credits, accounts will have a debit balance

Question 6

Procedures for Assets and Liabilities

Answer 6

Assets-Debits should exceed credits

Liabilities-credits should exceed debits

Question 7

procedures for stockholders equity

Answer 7

investments by stockholders revenues increas stockholders equity (credit)

Dividends and expenses decrease stockholders (debit)

Question 8

Normal Balance Credit

Answer 8

Assets in debit go up and credit goes down

Question 9

debits

Answer 9

increase assets and decrease liabilties

Question 10

Accounts that normally have debit balances are

Answer 10

assets. dividends and expenses

Question 11

How a journal is used in the recording process

Answer 11

Annalyze business transactions

and journalize the transaction and post to the ledger accounts

Question 12

contributions of the recording process

Answer 12

• complete the affects of a transaction
• chronoligical order of transactions
• prevent or locate errors because the debit and credit amounts can be easily compared.

Question 13

is comprised of the entire group of accounts maintained by a company

Answer 13

The ledger

Question 14

transfers journal entries to ledger accounts

Answer 14

posting

Question 15

The Order of the Trial Balance

Answer 15

Assets 
Liabilities 
Stockholders equity 
Revenues 
Expenses

Question 16

What does the IRFS use

Answer 16

The IFRS uses the same process for recording transactions as GAAP

Question 17

is the same under IFRS as GAAP

Answer 17

Trial Balance

Question 18

one difference between IFRS and GAAP is that

Answer 18

IFRS uses more fair value measurements than GAAP