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ACCT 1100 > Chapter 2 > Flashcards

Chapter 2 Flashcards

1
Q

Balance sheet accounts are arranged into how many categories?

A

3

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2
Q

Owner, Capital & Owner, Withdrawals are examples of what accounts?

A

Equity

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3
Q

What type of account are Accounts Payable & Note Payable?

A

Liabilities

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4
Q

Accounts Receivable, Prepaid Accounts, Supplies & Land are what type of account?

A

Assets

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5
Q

What is a record of increases & decreases in a specific asset, liability, equity, revenue or expense item?

A

Account

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6
Q

What is a list of all accounts a company uses not including account balances called?

A

Chart of Accounts

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7
Q

What is a record containing all accounts used by a company, including account balances?

A

General Ledger

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8
Q

What describes transactions entering an accounting system, such as a purchase order, sales receipt or check?

A

Source Document

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9
Q

What is a complete record of every transaction recorded?

A

Journal

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10
Q

Which accounts have a normal debit balance?

A

Assets, Withdrawals, Expenses

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11
Q

Which accounts have a normal credit balance?

A

Liabilities, Capital, Revenue

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12
Q

What are the starting points of financial statements?

A

Transactions & events

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13
Q

What type of account is Unearned Revenue?

A

Liability

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14
Q

Which accounts increase Equity?

A

Revenue & Owner’s Capital

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15
Q

Which accounts decrease Equity?

A

Expenses & Owner Withdrawals

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16
Q

What represents a ledger account & is used to show the effects of one or more transactions?

A

T-account

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17
Q

What increases liabilities & equity?

A

Credit

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18
Q

What is the 4-step process of Journalizing & Posting Transactions?

A

Identify, Analyze, Record & Post

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19
Q

What lists all ledger accounts & their balances at a point in time?

A

Trial Balance

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20
Q

Which financial statement reports revenues minus expenses incurred by a business over a period of time?

A

Income Statement

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21
Q

Which financial statement reports how equity changes over the reporting period from net income (or loss) & from any owner investments & withdrawals over a period of time?

A

Statement of Owner’s Equity

22
Q

Which financial statement reports the financial position (types & amounts of assets, liabilities & equity) at a point in time?

A

Balance Sheet

23
Q

What is the formula for Debt Ratio?

A

Total Liabilities / Total Assets

24
Q

What evaluates the level of debt risk?

A

Debt Ratio

25
Q

What does a higher debt ratio indicate?

A

A greater probability that a company will not be able to pay its debt in the future.

26
Q

What broadly groups accounts into assets, liabilities & equity?

A

Unclassified Balance Sheet

27
Q

What is a written promise of another entity to pay a specific sum of money on a specified future date to the holder?

A

Note Receivable or Promissory Note

28
Q

Which asset account becomes expenses once expired & used?

A

Prepaid Accounts

29
Q

What are customers & others who owe a company called?

A

Debtors

30
Q

What are packaging & cleaning materials considered?

A

Store Supplies

31
Q

What is the term for when an asset is used & wears down so its cost is gradually reported as an expense?

A

Depreciation

32
Q

What are claims by creditors against assets?

A

Liabilities

33
Q

Who are individuals & organizations that have rights to receive payments from a company?

A

Creditors

34
Q

A note payable is different from an account payable because why?

A

It comes from a formal contract called a promissory note & requires interest.

35
Q

What’s another term for accounts payable?

A

Trade Payables

36
Q

What 2 words almost always identify liability accounts?

A

Payable & Unearned

37
Q

What groups accounts into classifications (such as land & buildings into Plant Assets) & it reports current assets & liabilities before noncurrent assets & liabilities?

A

Classified Balance Sheet

38
Q

What is the owner’s residual interest in the assets of a business after subtracting liabilities?

A

Equity

39
Q

Which account are owner investments recorded in?

A

Owner Capital

40
Q

What is the opposite of owner investments?

A

Withdrawals

41
Q

What always increases equity?

A

Revenues

42
Q

What always decrease equity?

A

Expenses

43
Q

What is the left side of an account called?

A

Debit

44
Q

What is the right side of an account called?

A

Credit

45
Q

What terms by themselves do not mean increase or decrease?

A

Debit or Credit

46
Q

What determines whether a debit or credit increases or decreases?

A

Account

47
Q

What is it called when total debits exceed total credits?

A

Debit Balance

48
Q

What is the term for when total credits exceed total debits?

A

Credit Balance

49
Q

What is the transfer of journal entries to the ledger?

A

Posting

50
Q

What does PR stand for?

A

Posting Reference (Identification Number)

51
Q

A company that finances a relatively large portion of its assets with liabilities is said to have higher?

A

Financial Leverage

ACCT 1100 (2 decks)

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