Chapter 2 Terminology Flashcards
Source documents
Identify and describe transactions and events entering the accounting system.
Account
Is a record of increases and decreases in a specific asset, liability, equity, revenue, or expense.
General ledger
A record of all accounts and their balances.
Cash account
Asset account; shows a company’s cash balance.
Accounts receivable
Asset account; accounts recievables are held by a seller and a promises of payment from customers to sellers
Notes receivables
Asset account; this is also known as a promissory note. A written promise to pay.
Prepaid accounts
Asset accounts; assets from prepayments of future expenses (expenses expected to be incurred in future accounting periods).
Supply accounts
Assets until used
Equipment
Asset
Buildings
Assets
Land
Asset; building on the land is separate.
Debtors
Those who owe money
Creditors
Individuals and organizations that have rights to recurve payments from a company.
Accounts payable
Liability; promises to pay later
Notes payable
Liability; written promissory note to pay a future amount.
Unearned revenue accounts
Liability; a liability that is recorded when customers pay in advance for products and services.
Accrued liabilities
Amounts owed that are not yet paid.
Owner investments
Equity; when an owner invests in a company, it increases both assets and equity. The increase to equity is recorded in the account titled COMMON STOCK.
Owner distributions
Equity; when a corporation distributes assets to its owners, if decreases both company assets and total equity. The decrease is recorded in an account titled DIVIDENDS.
Revenue accounts
Equity; sales of products and services to customers are recorded in revenue accounts, which increase equity.
Expense accounts
Equity; costs of providing profits and services are recorded in expense accounts, which decrease equity.
Chart of accounts
List of all ledger accounts with an identification number and assigned to each account
T-Account
Represents a ledger account and is used to show the effects of transactions.
The left side of an account is called…
Debit
