Mid Term Review Slides Flashcards
Accurate, timely __________ ___________ is a necessary element to making good business decisions.
financial information
Decision makers must be able to understand how “the numbers” reflect their operations will reflect their ______, and in what way their _______ will affect “the numbers”.
operations, decisions
What is accounting?
Accounting identifies economic events, records the transactions, then communicates the results.
Who uses financial accounting data?
Internal users: managers and owners. External users: Creditors, vendors, bankers, government agencies, customers, outside investors, shareholders, stockholders.
What is monetary unit?
Means we account for things only that can be measured in dollars.
What is economic entity?
Means we keep accounting records for a company, a division of a company, separate from the owners and separate from other companies.
What is the cost principle?
Means we record things at actual cost at the actual time of the transaction.
Materiality
Means if a particular number is small compared to other numbers, don’t spend too much time on it.
Owner’s equity is what is left over from ___________ minus ____________ and what belongs to the owner.
assets, liabilities
In all transactions, something is given, something is received, they have ______ value.
equal
What are the basic financial statements?
Balance sheet, income statement, changes of owner’s equity, cash flow.
Each financial statement provides information _______ in other statements.
not seen
What is a balance sheet?
A snapshot for a moment of time of assets = liabilities and owner’s equity.
What is an income statement?
The sales and revenue for a period of time, less costs and expenses for that period of time. This information provides profits. Profits and losses increase or decrease owner’s equity.
What is a statement of owner’s equity?
The beginning balance for a period of time plus everything in less everything out. The result provides the ending balance.
What is the cash flow statement?
The beginning balance in cash, plus all cash in and from what source, less cash out and to what destination. For a time period.
What are the five major categories of accounts?
Assets, liabilities, owner’s equity, revenues and expenses.
Which accounts have normal debit balances?
Assets and expenses
Which accounts have normal credit balances?
Liabilities, owner’s equity and revenue
If the normal balance is a debit, then _______ to that account will increase the balance, _______ will reduce the balance.
debits, credits
If the normal balance is a credit, than ________ to that account will increase the balance, __________ will reduce the balance.
credits, debits
Transactions are recorded in __________ order in the journal.
chronological
At the end of the period, entries in the journal are _______ to the ledger.
posted
What is the Chart of Accounts?
A list of accounts in a company, some for assets, some for liabilities, some for owner’s equity.
The __________ is the list of all accounts in the ledger showing the ending balance of each account, and if that balance is a debit or a credit
trial balance
Unearned or deferred revenue is a(n) ____________. When a business provides a service with an agreement to be paid at a later date, that is falls under an account receivable and is a(n) __________.
liability, asset
What are the typical accounts that need adjustments?
prepaid insurance, supplies, fixed assets/depreciation, accrued interest, accrued payroll, unearned revenue, inventory
What are the primary goals of internal control?
1.) protect assets 2.) assure numbers are accurate 3.) assure laws are followed
