Chapter 1 Lecture Flashcards
1
Q
- resource of the firm
- something that we use in production
- increase is a debit
- expenses, dividends
A
assets
2
Q
- claims by creditors
- future sacrifice of an asset
- we owe something to somebody
- increase is a credit
- common stock, preferred stock, and revenue
A
liabilities
3
Q
- claims by owners
- everything left over
- 2 types of retained earnings and contributed capital (paid in)
A
stockholders equity
4
Q
2 types of stockholder’s equity
A
- retained earnings
- contributed capital (paid in)
5
Q
2 types of contributed capital “paid in”
A
- common stock
- preferred stock
6
Q
- obtain information about external transactions from the source document
- analyze the transaction
- record the transaction in a journal
- post from the journal to the general ledger accounts
- prepare an unadjusted trial balance
- record adjusting entries and post to the general ledger accounts
- prepare an adjusted trial balance
- prepare financial statements
- close the temporary accounts to retained earnings
- prepare a post-closing trial balance
A
the accounting cycle
7
Q
when do you post an entry
A
if the transaction or event result in a change in the accounting equation
8
Q
the journal entry summarizes a single transaction. the ________ starts to aggregate and summarize information for multiple transactions
A
ledger
9
Q
2 primary principles we follow to apply accrual accounting
A
- revenue recognition
- expense recognition
10
Q
- revenues are recorded when they are earned/incurred
- does not necessarily involve cash
A
revenue recognition
11
Q
- expenses are recorded in the same period as the revenues to which they relate
- does not necessarily mean when cash moves
A
expense recognition
12
Q
method of accounting where revenues and expenses are recorded when they are earned or incurred, not when cash is actually received or paid
A
accrual accounting
13
Q
have one permanent and one temporary account
A
adjusting entries
