Accounting Test 1 Flashcards
a system of gathering financial information about a business and reporting this information to users.
accounting
6 steps in accounting process…IN ORDER
- Analyzing
- Recording
- Classifying
- Summarizing
- Reporting
- Interpreting
amount a business charges customers for products sold or services performed
revenue
revenue _________ owner’s equity & assets
increases
any accounting period of 12 months
fiscal year
fiscal year can coincide with….
calendar year
concept that income determination can be made on a periodic basis
accounting period concept
3 financial statements
income statement
statement of owner’s equity
balance sheet
income statement is also called…
profit & loss statement …..
operating statement
reports profitability of business operations for a specific period of time.
income statement
reports activities that affected owner’s equity for a specific period of time
statement of owner’s equity
reports a firm’s assets, liabilities, & owner’s equity
balance sheet
the relationship between the 3 basic accounting elements…
accounting equation
nonbusiness assets and liabilities are NOT included in the business accounting records
business entity concept
the most common liability …an unwritten promise to pay a supplier for assets purchased or services received
account payable
formal written promise to pay supplier or lenders specified sums of money at definite future times
notes payable
the amount of money owed to the business by its customers as a result of making sales on account or credit
accounts receivable
bookkeepers focus on the ______________
processing of accounting data…
accountants design the _________
accounting information system
an economic event that has a direct impact on the business
business transaction
3 basic questions to analyze business transactions
- What happened?
- Which accounts are affected?
- How is accounting equation affected?
if total revenues are greater than total expenses for a period, the EXCESS is the ____________
net income
if total expenses are greater than total revenues for the period, the EXCESS is _________-
net loss
balance sheet is also known as…
statement of financial position
statement of financial condition
