accounting exam Flashcards
preparing and recording information in the accounting records
bookkeeping
maturity date
payment dude date of any liability
cost principle
assets are valued according to the cost principle. When a business acquires an asset. The value of the asset is recorded at its actual cost to the business either its acquisition cost or its construction cost.
liquidity order
is the order in which current assets would likely be converted to cash.
account recievable
refers to the total amount due from debtors usually within 30 days.
equities
are claimed by both creditors and owners against the assets of a company
business entitiy principle
requires that each business be considered a seperate entity, and that the financial data for each each business be kept seperate from the owners personal financial data
is a financial statement that lists the assets liabilities and owners equity at a specific date
balance sheet
what is the purpose of accounting
to provide financial information for decision making
is the financial status of a person or company represented by the assets , liabilties and net worth or personal equity.
financial position
items of value owned by a business and person
assets
the debts of a person or a business
liabilities
a persons net worth
personal equity
a person or business that extended credit or loaned money to another individual or business
creditor
is the difference between the value of items owned and the debts owed
personal net worth
an exchange of things of value
business transaction
the period of time covered by the financial statements
accounting periods
the principles rules and guidelines followed when preparing and presenting accounting infromation
accounting standards
non profit organizations similar to a bank that are operated by the employees of a company or organization
credit union
a business that is listed on a stock exchange and is accountable to the public
public business
a business that does not have shares traded on the stock market
private business
fair value principle
uses the current fair market value of the assets for the financial reports.
a form in which changes caused by transactions are recorded
account
the left side of the account
debit
the right side of the account
credit
a group of accountants that may be in the form of a book containing pages for each account in a manual accounting system
ledger
requires that equal debit amounts and equal credit amounts be recorded for each transaction
double entry accounting
a list of the ledger account balances. The total of the debit balances should equal the total of the credit balances
trial balance
increase in owners equity resulting from the successful operation of a business
profit
amounts earned by the business from the sale of goods services during routine operations
revenue
the difference between revenue and expenses when revenue is greater than expenses.
net income
income statement
a formal financial statment that summarizes revenue and expenses to determine the net income or net loss for a stated period of time
time period principle
requires the definition and consistent use of the same accounting period
matching principle
expenses for an accounting period must be matched with the revenue generated during the same period to derive an accurate net income.
accural basis of accounting
the system under which revenue is recorded when earned and expenses are recorded once incurred.
revenue recognition principle
revenue is recognized at the time the revnue is definitely earned
cash basis of accounting
a method where you record transactions when cash is paid or recieved
an equity account used to record the withdrawal of assets by an owner
drawings
work sheet
an accounting document used to prepare financial statements
sales invoice
sale on account to a customer
bank debit memo
deduction from a companys bank account
blank credit memo
ncrease in the companys bank account
cheque issued
payment made to a creditor ( accounts payable ) or cash purchase
cheque recieved
payment recieved from a customer ( account
what number is assets
100-199
what number is revenue
400-499
what number is liabilities
200-299
what number is owners equity
300-399
what is journalizing
the process of recording transactions in a journal
chronological recording of all parts of a transaction in one place
journal
a transfer of information from a journal to the general ledger
posting
records the assets liabilities and owners equity in a journal when a business first begins operations
opening entry
a list of the names and account numbers of all of the accounts in a ledger
chart of accounts
what is a transposition error
an error that is caused by substituting two ( possibly more) digits. Example being meaning to write 45 but writing 54
three forms trial balances can take
-formal trial balance
- list form
- machine tape form
compound entry
when multiple transactions are recorded in a single journal entry.
balance column ledger account
a type of accounting record that includes multiple comlumns to track the balance of different accounts
principle of objectivity
the principle of objectivity states that financial information should be recorded and reported based on verifiable evidence and facts , without bias or personal opinions
