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Accounting > Module 3 > Flashcards

Module 3 Flashcards

1
Q

This is the most basic tool of accounting and the equality of it must be maintained at all times because if not. there is an error.

A

Accounting equation

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2
Q

This is also known as the basic summary device. it the basic storage of information in accounting. It is a record of the increases and decreases in a specific item of asset, liability,equity,income or expense.

A

Account

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3
Q

An account may be represented through a __________” known as simplest form of account.

A

T-account

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4
Q

known as simplest form of account.

A

T-account

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5
Q

from the Latin word “debere”, the left side of the account or accounting equation.

A

Debit

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6
Q

from the Latin word credere, the right side of the account or accounting equation

A

Credit

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7
Q

Accounting is based on a ________________ which means that the dual effects of a business transaction are recorded

A

Double-entry system

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8
Q

Each transaction is recorded in two parts ______ and _______

A

Debit and Credit

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9
Q

No transaction is recorded by a ______ alone or a _______ alone.

A

Debit
Credit

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10
Q

For each amount that is ______, there must be a corresponding amount that is ________, and vice-versa

A

debited
credited

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11
Q

The total _____ for a transaction must always equal the total ______

A

debits
credits

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12
Q

the dual effects of a business transaction is recorded. A debit side entry must have a corresponding credit side entry. For every transaction, there must be one or more accounts debited and one or more accounts credited. Each transaction affects at least two accounts. The total debits for a transaction must always equal the total credits.

A

Double-Entry System

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13
Q

refers to the side of the account-debit or credit- where increases are recorded.

A

Normal Balance of An Account

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14
Q

This is an economic occurrence that causes changes in an enterprise’s assets, liabilities, and/or equity.

A

accounting event

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15
Q

This is a particular kind of event that involves the transfer of something of value between two entities.

A

transaction

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16
Q

This is any medium of exchange that a bank will accept for deposit at face value.

A

Cash

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17
Q

are readily convertible to known amounts of cash and which are subject to insignificant risk of changes in value.

A

Cash Equivalents

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18
Q

This is a written pledge that the customer will pay the business a fixed amount of money on a certain date.

A

Notes Receivable

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19
Q

These are claims against customers arising from sale of service or goods on credit. This offers less security than a promissory note

A

Accounts Receivable

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20
Q

Per PAS No. 2, these are assets which are (a) held for sale in the ordinary course of business; (b) in the process of production for such sale; or (c) in the form of materials or supplies to be consumed in the production process or in the rendering of services.

A

Inventories

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21
Q

hese are expenses paid for by the business in advance. It is an asset because the business avoids having to pay cash in the future for a specific expense. These include insurance and rent.

A

Prepaid Expenses

22
Q

Per PAS No. 16, these are tangible assets that are held by an enterprise for use in the production or supply of goods or services, or for rental to others, or for administrative purposes and which are expected to be used during more than one period.

A

Property, Plant and Equipment.

23
Q

It is a contra account that contains the sum of the periodic depreciation charges.

A

Accumulated Depreciation.

24
Q

Per PAS No. 38, these are identifiable, nonmonetary assets without physical substance held for use in the production or supply of goods or services, for rental to others, or for administrative purposes. These include goodwill, patents, copyrights, licenses, franchises, trademarks, brand names, secret processes, subscription lists and non-competition agreements.

A

Intangible Assets.

25
Q

This account represents the reverse relationship of the accounts receivable. By accepting the goods or services, the buyer agrees to pay for them in the near future

A

Accounts Payable.

26
Q

The business entity is the maker of the note; that is, the business entity is the party who promises to pay the other party a specified amount of money on a specified future date

A

Notes Payable

27
Q

Amounts owed to others for unpaid expenses. This account includes salaries payable, utilities payable, interest payable and taxes payable.

A

Accrued Liabilities

28
Q

When the business entity receives payment before providing its customers with goods or services.

A

Unearned Revenues

29
Q

These are portions of mortgage notes, bonds and other long-term indebtedness which are to be paid within one year from the balance sheet date.

A

Current Portion of Long-Term Debt

30
Q

This account records long-term debt of the business entity for which the business entity has pledged certain assets as security to the creditor.

A

Mortgage Payable.

31
Q

Business organizations often obtain substantial sums of money from lenders to finance the acquisition of equipment and other needed assets.

A

Bonds Payable

32
Q

This account is used to record the original and additional Investments of the owner of the business entity. It is increased by the amount of profit earned during the year or is decreased by a loss. Cash or other assets that the owner may withdraw from the business ultimately reduce it This account title bears the name of the owner.

A

Capital

33
Q

When the owner of a business entity withdraws cash or other assets, such are recorded in the drawing or withdrawal account rather than directly reducing the owner’s equity account.

A

Withdrawals

34
Q

Revenues earned by performing services for a customer or client; for example, accounting services by a CPA firm, laundry services by a laundry shop.

A

Service Income

35
Q

Revenues earned as a result of sale of merchandise; for example, sale of building materials by a construction supplies firm.

A

Sales

36
Q

The cost incurred to purchase or to produce the products sold to customers during the period.

A

Cost of Sales

37
Q

Includes all payments as a result of an employer-employee relationship such as salaries or wages, 13th month pay, cost of living allowances and other related benefits.

A

Salaries or Wages Expense.

38
Q

Expenses related to use of telecommunications facilities, consumption of electricity, fuel and water.

A

Utility/Telecommunications, Electricity, Fuel and Water Expenses.

39
Q

Expense for space, equipment or other asset rentals

A

Rent Expense

40
Q

Expense of using supplies (e.g. office supplies) in the conduct of daily business.

A

Supplies Expense

41
Q

Portion of premiums paid on insurance coverage (e.g. on motor vehicle, health, life, fire, typhoon or flood) which has expired.

A

Insurance Expense

42
Q

The portion of the cost of a tangible asset (e.g. buildings and equipment) allocated or charged as expense during an accounting period.

A

Depreciation Expense

43
Q

The amount of receivables estimated to be doubtful of collection and charged as expense during an accounting period.

A

Uncollectible Accounts Expense.

44
Q

An expense related to use of borrowed funds.

A

Interest Expense.

45
Q

RULES OF DEBIT AND CREDIT

Income increase ________

A

Owners Equity

46
Q

Expense Decrease _______

A

Owners Equity

47
Q

Increases in Income are recorded as ________

A

Credits

48
Q

Decreases in income recorded as ______

A

Debits

49
Q

The balance in this account is deducted from the cost of the related asset-equipment or buildings-to obtain book value.

A

Accumulated Depreciation

50
Q

An expense related to use of borrowed funds

A

Interest expense

Accounting (5 decks)

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