Etc. Flashcards
Corporation
A business organized under state law that is a separate legal entity
1 or more owners (called stockholders)
Partnership
A business with two or more owners and not organized as a corporation
Sole Proprietorship
A business with a single owner
Assets
Future economic benefit
Ex. Cash, Land, Equipment, ACCOUNTS RECEIVABLE
Liabilities
Future economic sacrifice or obligation
Ex. Salaries/Notes/Accounts Payable, Unearned Revenue
Equity
Something a business owes to its owners, or the value of the investment to the owner; what’s yours after taking out what you still owe
Ex. Revenues, Expenses, Dividends
Revenues
The income that comes in from customers
Expenses
Money a company spends on things like rent, salaries, materials, and utilities
Normal Balance- Asset
Debit (cash, inventory)
Normal Balance- Liability
Credit (accounts/notes payable, unearned revenue)
Normal Balance- Equity
Credit (common stock, retained earnings)
Normal Balance- Expense
Debit (rent, salaries)
Normal Balance- Revenue
Credit (service revenue)
Trial Balance
A list of all accounts with their balances
Assets listed first then liabilities and equity
Cash Accounting
Records revenue when money is received and expenses when money is paid out
Accrual Accounting
Records revenue when it is earned and expenses when they originally occur
Contra-account
An account that reduces the balance of another related account
Ex. Equipment= 10,000 Depreciation= 2,000
Book Value
The value of an asset as recorded on a company’s balance sheet
Calculation: Original cost of asset - accumulated depreciation
Temporary Account
An account that is used to accumulate transactions for a specific period and is then closed at the end of that period
Ex. Revenues, Expenses, and Dividends
Permanent Account
An account that maintains its balance over multiple accounting periods and is not closed at the end of the period
Ex. Assets, Liabilities, and Equity
What is included in an Income Statement?
Revenues
Expenses
= Net Income
What is included on a Balance Sheet?
Everything not included on a Statement of Retained Earnings or Income Statement
What is included on a Statement of Retained Earnings?
Beginning Balance
Dividends
Net Income
Accrued Revenue v Deferred Revenue
Accrued Revenue: recognized before cash is received
Deferred Revenue: recognized after cash is received but before the service is provided or product is delivered
