Concepts Flashcards
what is the definition of accounting?
an information system that measures business activities, processes data
what does DEAD CRLS mean?
Debit: Equity, assets, and liabilities. Credit: Revenue, liabilities, and stockholders equity
what is the home side for DEAD acronym?
left (debit)
what is the home side for CRLS acronym?
right (credit)
what is the expense recognition rule?
Basis for recording expenses. Has two steps: 1. Identify all the expenses during the accounting period. 2. Measure the expenses and recognize them in the same period in which related revenues are earned.
what is the revenue recognition rule?
Requires that businesses recognize revenue when it’s earned (accrual accounting) rather than when payment is received (cash accounting)
Two basis of accounting are. . .
Cash and Accrual
what are NOT examples of financial transactions?
Negotiating with a customer, purchasing a car for personal use, hiring a new employee, donating money or fulfilling social responsibilities
what is the book of original entry also called?
the general journal
what drives ethics?
culture, socioeconimcs, religion, legal complacence, transparency, accountability
what is a source document?
proof that a transaction has occurred
what are account titles?
cash, accounts payable, retained earnings
what is an asset exchange?
exchange of assets in the asset section?
what is a compound entry?
for example: cash showing 2 things, retained earnings showing 3 things listed one after another
fiscal calendar?
random 12 months
