Chapter 2- Recording and Planning in Business Flashcards
Define an Account
a place to record transactions that occur within a business
what are the specific account categories?
- assets
- liabilities
- owner’s equity
What are liabilities?
things that a company owes.
What are assets?
things that a company owns
What are Owner’s equity?
the amount of money that company owners have invested in the business
what are current assets?
those assets that will be used up or sold within one year
what are noncurrent assets?
also called long term assets, are things that a business has that will not be used up or turned into cash within a year
What are current liabilities
bills or any other debt obligation that is due within one year
what are noncurrent liabilities?
debt obligations that will extend for longer than 12 months.
what is Owner’s capital?
direct investments made into the company
what is stockholder’s equity?
any equity that comes from the sale of stocks or bonds
What is meant by double-entry accounting?
for each transaction, at least two accounts will be affected.
What is a ledger?
a book that contains all the accounts
what is the general ledger?
contains information on all the company accounts
What is the subsidiary ledger?
contains information about specific individual accounts