General Information Flashcards
Accounting
planning, keeping, analyzing, and interpreting records usually for a business or organization
Accounting Records
orderly records of a business’ financial activities
Equities are _______ and ________
Liabilities and Capital
Assets
anything a business owns; always listed on the left side of the balance sheet
Liabilities
anything owed by a business; always listed on the right side of the balance sheet
Capital
the value of an owners equity; always listed on the right side of the balance sheet
How do you find Capital?
total assets minus total liabilities
The heading of a balance sheet must include, in order:
- Name of business
- Name of statement
- Date of statement
On a balance sheet, what does a single underline mean?
Something has been added or subtracted
On a balance sheet, what does a double underline mean?
The work is complete
A journal with two amount columns is a _______________.
General Journal
What is a source document?
a business paper from which information is obtained for a journal entry, required for the opening entry in a general journal
What is a memorandum?
a form on which a brief message is written describing an entry
What does a General Ledger consist of?
all the accounts for a business
What is a Chart of Accounts?
a list of all of the account titles and numbers showing the location of each account in a ledger
What must you do after posting an entry to a ledger?
post reference
What is the post reference on a general ledger? What does it mean?
G1 - G stands for General, 1 comes from page number.
Balance Sheet
A financial statement that reports assets, liabilities, and capital on a specific date
Debit
An entry recorded in the debut column. Results in an increase in assets or a decrease in liabilities or capital.
Credit
An entry recorded in the credit column. Results in a decrease in assets or an increase in liabilities or capital.
Transaction
Occurs any time money changes in a business
Revenue
An increase in capital resulting from the operation of a business (Sales)
Expenses
A decrease in capital resulting from the operation of a business (debit expense account, credit cash)
Double-Entry Accounting
The recording of debit and credit parts of a transaction. Provides a complete record of each transaction.
Journalizing
Recording business transactions in a journal
T-Account
A skeleton form of an account showing only the debit and credit columns
Normal Debit balance
The account balance is written in the debit side
Normal Credit balance
The account balance appears on the credit side
Combination Journal
A multi-column journal in which transactions are recorded. It has 5 columns.
Proving a journal
Add up the total of the debit columns and the total of the credit columns
Proving cash
Cash on hand at the start of the month
Plus total cash debits
Minus total cash credits
Equals cash on hand at month end
Worksheet
A columnar accounting firm on which the financial condition of a business is summarized.
- Proves that general ledger is correct
- Contains adjustments
- Shows net income or loss
Adjustments
Changes recorded to update general ledger accounts at the end of a fiscal period.
Adjustments are made to supplies and pre-paid insurance because they are used during the month.
Net Income
The difference between total revenue and total expenses when revenue is greater
Net Loss
The difference between total revenue and total expenses when total expenses are greater
Income Statement
A financial statement showing the revenue and expenses for a fiscal period
Closing Entries
Transfer balances of temporary accounts to permanent accounts.
- Close revenue accounts
- Close expense accounts
- Close the income summary account and record net income of net loss in the owner’s capital account
- Close the owner’s drawing account
Adjusting Entries
Entries recorded at the end of the period to adjust the ending balances in accounts
