Ch2 - Accounting for Business Transactions Flashcards
What are source documents?
Source documents identify and describe transactions and events entering the accounting system.
What is an account?
An account is a record of increases and decreases in a specific asset, liability, equity, revenue or expense.
What is the general ledger?
The general ledger is a record of all accounts used by a company.
Name some asset accounts.
Cash, Accounts Receivable, Note Receivable, Prepaid Accounts, Supplies Accounts, Equipment Accounts, Building Accounts, Land
What are Accounts Receivable?
Accounts receivable are held by a seller and are promises of payments from customers to sellers.
What is a Note Receivable?
A note receivable, or promissory note, is a written promise of another entity to pay a specific sum of money on a specified future date to the holder of the note.
Name some Liability Accounts.
Accounts Payable, Note Payable, Unearned Revenue Accounts, Accrued Liabilities
Who are creditors?
Creditors are individuals and organizations that have rights to receive payments from a company.
What is Unearned Revenue?
Unearned Revenue is a liability that is settled in the future when a company delivers its products or services.
What are current items with regards to assets and liabilities?
Current items are expected to be either collected or owed within the next year.
What does the double entry accounting system require?
At least two accounts are involved with at least one debit and one credit. The total amount debited must equal total amount credited.
