Fundamental Accounting Principles CH2 Flashcards

1
Q

Source Documents

A

Identify and describe transactions and events entering the accounting system
EX. receipts, checks, purchase orders

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2
Q

Account

A

a record of increases and decreases in a specific asset, liability, equity, revenue, or expense

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3
Q

General Ledger

A

a record of all accounts used by a company

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4
Q

Unclassified Balance Sheet

A

broadly groups accounts into assets, liabilities, and equity

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5
Q

Accounts Receivable

A

held by a seller are promises of payment from customers to sellers.
* reduced when customer pays and then cash is increased.

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6
Q

Notes Receivable

A

a promissory note, written promise of another entity to pay a certain sum of money on a specific future date.

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7
Q

Debtors

A

Assets from prepayments of future expenses
* move from prepayments to expenses when expenses occur *ie. when supplies are used
EX. prepaid meal plays remain in prepayment until a meal is purchased

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8
Q

Supplies Account

A

Assets until they are used.
* when they are used their costs are reported as expenses.
IE office supplies like paper

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9
Q

Equipment accounts

A

Equipment is a asset. when it is used it wears down and is recorded as an expense.

the expense is called depreciation.

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10
Q

Building Accounts

A

Stores, offices, warehouses are assets because they provide future benefits. When the building is used it depreciates and the depreciation is recorded as an expense

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11
Q

Land

A

Cost of land is recorded in a land account

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12
Q

Types Asset Accounts

A
Cash
Accounts Receivable
Note Receivable
Prepaid Accounts
Supplies Accounts
Equipment Accounts 
Building Accounts
Land
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13
Q

Types of Liability accounts

A
Obligations to transfer assets or provides products or services to others.
Accounts Payable
Note Payable
Unearned revenue accounts 
Accrued Liabilities
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14
Q

Unearned Revenue Account

A

Liability that is settled in the future when a company delivers its products or services.
Magazine subscriptions collected in advance
Rent collected in advance
Season ticket sales by sports teams

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15
Q

Accrued Laibilities

A

Accrued liabilities owned that are not yet paid
Wages payable - worker’s pay
Taxes Payable
Interest Payable

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16
Q

Equity Accounts

A

Owner’s claim on company assets

Equity = Owner’s capital - Owner’s withdrawals + Revenues - Expenses

17
Q

Intangible Assets

A
Assets that do not have physical existence.
Patents
Logos
Brands
Brand Loyalty
18
Q

Owner Capital

A

When an owner invests in a company it increases both assets and equity

19
Q

Owner Withdrawals

A

Assets for personal use

* decreases both assets and total equity

20
Q

Revenue Accounts

A

Amounts received from sales of products and services to customers.
*remove always increases equity

21
Q

Expense Accounts

A

amounts used for costs of providing products and services are recorded in expenses accounts
*always decrease equity

22
Q

Double-Entry system

A

Double entry accounting demands the accounting equation remain in balance, which means that for each transaction:

  • at least two accounts are involved, with at least one debit and one credit.
  • Total amount debited must equal total amount credited.
  • net increases on one side have equal effect on the other side.
23
Q

Normal balance sheet credit accounts (Cr)

A

Owner, Capital
Accounts Payable
Interest Payable
Unearned Revenue

24
Q

Normal balance sheet debit accounts (Dr)

A
Prepaid Rent
Note Receivable
Accounts Receivable
Equipment
Land
Prepaid Insurance
Owner, Withdrawals
Utilities Expense
25
Journal
complete record of each transaction in one place
26
Income Statement
reports revenues earned minus expenses
27
Statement of Owner's Equity
reports how equity changes over the reporting period
28
Balance Sheet
reports the financial position of a company at a point in time