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Mac Fall 2023 > Accounting Test 1 > Flashcards

Accounting Test 1 Flashcards

1
Q

Income statement

A

shows revenue and expenses (result will be net income or loss)

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2
Q

Statement of retained earnings

A

equity (looking at what happened to it over a period of time)

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3
Q

Balance sheet

A

assets, liabilities, and equity (snapshot of only one day)

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4
Q

statement of cash flows

A

cash in + out flows

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5
Q

financial statement

A

business documents that companies use to report results of their activities to various user groups

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6
Q

accounting cycle

A

the process by which a sompany’s financial statements are prepared

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7
Q

financial accounting

A

prepares info for decision makers outside the entity

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8
Q

proprietorship owners

A

one owner. these tend to be small retail stores or solo providers

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9
Q

partnership owners

A

two or more owners

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10
Q

LLC owners

A

members

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11
Q

corporation owners

A

stockholders- generally many owners

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12
Q

proprietorship liability

A

proprietor is personally liable

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13
Q

partnership liability

A

general partners are personally liable

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14
Q

LLP ownership

A

partners- two or more owners

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15
Q

LLP liability

A

partners are not personally liable

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16
Q

LLC liability

A

members are NOT personally liable

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17
Q

Corporation liability

A

Stockholders are NOT personally liable

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18
Q

Assets

A

economic resources expected to produce benefit in the future (is money now or will be in future)

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19
Q

Liabilities

A

“outsider claims”- things we owe to others

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20
Q

Owners equity

A

equity- insider claims

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21
Q

accounting equation

A

assets = liabilities + equity

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22
Q

common stock

A

corp issues to stockholders as evience of ownership

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23
Q

retained earnings

A

amount earned by income producting activities (revenue increases and expenses and dividends decrease it)

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24
Q

Statements of cash flows

A

reports cash reciepts and payments in operating, investing, and financing activities

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25
Q

accounts receivable

A

money that company will get from clients/consumers later

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26
Q

cash is ___

A

asset

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27
Q

accounts recievable is _____

A

asset

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28
Q

inventory is ______

A

asset

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29
Q

prepaid expenses is ____

A

asset

30
Q

Investments are ____

A

assets

31
Q

Property is _____

A

asset

32
Q

common assets

A

cash, accounts receivable, inventory, prepaid expenses, investments, and property

33
Q

common liabilities

A

accounts payable, notes payable, and accrued liabilities

34
Q

common stock is ____

A

equity

35
Q

retained earnings are ______

A

equity

36
Q

dividends are ____

A

equity

37
Q

revenues are ____

A

equity

38
Q

expenses are ____

A

equity

39
Q

accrual accounting

A

records the impact of a transaction as it occurs

40
Q

cash-basis accounting

A

records only cash transactions (reciepts and payments)

41
Q

adjusting entries include:

A

deferred revenue, depreciation, accruals

42
Q

deferred revenue

A

a deferral is an adjustment for payment of an item or reciept of cash in advance

43
Q

accrual

A

the opposite of a deferral. for an accrued EXPENSE

44
Q

prepaid expenses

A

paid in advance. these are assets because they provide future benefit

45
Q

book value

A

net amount of a plant asset (cost minus accumulated depreciation)

46
Q

accrued expense

A

a liability froom an expense that has not yet been paid

47
Q

unearned revenue

A

collecting cash from customers before earning the revenue. this is a liability

48
Q

closing the books

A

preparing the accounts for the next period’s transations

49
Q

closing entries

A

set the revenue, expenses, and dividends back to zero at end of a period

50
Q

permanent accounts

A

assets, liabilities, and equity ( does not get adjusted or closed)

51
Q

temporary accounts

A

revenues and expenses related to a limited period (these do get adjusted)

52
Q

liquidity

A

how quickly an item can be converted to cash

53
Q

net working capital

A

(total current assets- total current liabilities)

54
Q

current ratio

A

total current assets/total current liabilities

55
Q

good number for current ratio

A

between 1.2-1.5

56
Q

debt ratio

A

total liabilities/total assets

57
Q

good number for debt ratio

A

below 0.6 ish. the norm is 0.6-0.7ish

58
Q

closing process in steps:

A
  1. debit revenue, credit retained earnings
  2. credit each expense, debit retained earnings
  3. credit dividends, debit retained earnings
59
Q

assets t account

A

debit (+); credit (-)

60
Q

liabilities t account

A

debit (-); credit (+)

61
Q

the two groups for equity in t account

A
  1. revenue, common stock, retained earnings
  2. dividends, expenses
62
Q

revenue, common stock, retained earnings t account

A

debit (-); credit (+)

63
Q

dividends, expenses t account

A

debit (+); credit (-)

64
Q

moodle readings

A

do them

65
Q

Accrued revenue

A

A revenue earned but not yet collected. This is an asset.

66
Q

When putting depreciation on an adjusting entry

A

depreciation expense + accumulated depreciation (this is a contra account)

67
Q

Salary on adjusting entries

A

Salary expense and salary payable

68
Q

Income tax adjusting entries

A

Income tax (debit)and income tax payable (if increasing tax payable+ then credit)

69
Q

Accumulated depreciation

A

This is an contra asset. So it’s an asset. So it’s a PERMANENT account

70
Q

Do prepaid expenses go on closing entries?

A

No!!! They are an ASSET

71
Q

Is unearned revenue on a closing statement

A

NO! This is a LIABILITY

Mac Fall 2023 (6 decks)

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