Etc.

Question 1

Corporation

Answer 1

A business organized under state law that is a separate legal entity

1 or more owners (called stockholders)

Question 2

Partnership

Answer 2

A business with two or more owners and not organized as a corporation

Question 3

Sole Proprietorship

Answer 3

A business with a single owner

Question 4

Assets

Answer 4

Future economic benefit

Ex. Cash, Land, Equipment, ACCOUNTS RECEIVABLE

Question 5

Liabilities

Answer 5

Future economic sacrifice or obligation

Ex. Salaries/Notes/Accounts Payable, Unearned Revenue

Question 6

Equity

Answer 6

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

Question 7

Revenues

Answer 7

The income that comes in from customers

Question 8

Expenses

Answer 8

Money a company spends on things like rent, salaries, materials, and utilities

Question 9

Normal Balance- Asset

Answer 9

Debit (cash, inventory)

Question 10

Normal Balance- Liability

Answer 10

Credit (accounts/notes payable, unearned revenue)

Question 11

Normal Balance- Equity

Answer 11

Credit (common stock, retained earnings)

Question 12

Normal Balance- Expense

Answer 12

Debit (rent, salaries)

Question 13

Normal Balance- Revenue

Answer 13

Credit (service revenue)

Question 14

Trial Balance

Answer 14

A list of all accounts with their balances

Assets listed first then liabilities and equity

Question 15

Cash Accounting

Answer 15

Records revenue when money is received and expenses when money is paid out

Question 16

Accrual Accounting

Answer 16

Records revenue when it is earned and expenses when they originally occur

Question 17

Contra-account

Answer 17

An account that reduces the balance of another related account

Ex. Equipment= 10,000 Depreciation= 2,000

Question 18

Book Value

Answer 18

The value of an asset as recorded on a company’s balance sheet

Calculation: Original cost of asset - accumulated depreciation

Question 19

Temporary Account

Answer 19

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

Question 20

Permanent Account

Answer 20

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

Question 21

What is included in an Income Statement?

Answer 21

Revenues
Expenses
= Net Income

Question 22

What is included on a Balance Sheet?

Answer 22

Everything not included on a Statement of Retained Earnings or Income Statement

Question 23

What is included on a Statement of Retained Earnings?

Answer 23

Beginning Balance
Dividends
Net Income

Question 24

Accrued Revenue v Deferred Revenue

Answer 24

Accrued Revenue: recognized before cash is received

Deferred Revenue: recognized after cash is received but before the service is provided or product is delivered

Question 25

Limited-Liability-Company (LLC)

Answer 25

A company in which each member is only liable for their own actions

One or more owners

Question 26

Debits v. Credits

Answer 26

Debits: Increase asset/expense accounts or Decrease liability/equity accounts

Credits: Decrease asset/expense accounts or Increase liability/equity accounts