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Trakesha's 4th Quarter > Office Accounting Exam 1 > Flashcards

Office Accounting Exam 1 Flashcards

1
Q

Recording financial information in a prescribed manner

A

Bookkeeping

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2
Q

Language of business / Used to communicate financial information

A

Accounting

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3
Q

Accounting is based on six (6) functions related to financial data. What are they?

A

Analyzing Classifying Recording

Summarizing Reporting Interpreting

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4
Q

Looking at business events - “Transactions” - Determining their effect on the business.

A

Analyzing

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5
Q

Sorting and grouping similar items together. - Facilitates analysis and recording of financial information.

A

Classifying

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6
Q

Entering financial information about business transactions in the accounting system.
Use of computers - makes work easier

A

Recording

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7
Q

Bringing various items of information together. / Determining results

A

Summarizing

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8
Q

Telling the results of the financial information. Using tables of numbers / Describing results obtained from summarizing

A

Reporting

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9
Q

Deciding or Determining the meaning and importance of financial information.
What does the information say about the transactions which have occurred?
How will this information influence future business operations?

A

Interpreting

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10
Q

Procedures and guidelines to be followed in the accounting and reporting process. Ensures continuity in accounting and reporting processes.

A

Generally accepted accounting principles (GAAP). Developed by the Financial Accounting Standards Board.

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11
Q

THE ACCOUNTING ELEMENTS

A

Assets
Liabilities
Owner’s equity

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12
Q

Property of monetary value owned by a business

A

Assets

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13
Q

current asset; Unwritten promise by a customer to pay, at a later date, for goods sold or services rendered.

A

Accounts receivable

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14
Q

current asset; Items considered assets when acquired. / Becomes expenses when consumed or expired
Example: Prepaid insuranceDeduct each month of insurance as it is used

A

Prepaid expenses

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15
Q

Any debts that a business owes / Current liabilities / Fixed/long-term

A

Liabilities

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16
Q

Debts generally paid within one year / Accounts payable / Taxes payable

A

Current liabilities

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17
Q

Unwritten promise to pay creditors for property purchased on credit or for service received on credit

A

Accounts payable

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18
Q

Amount by which assets exceed total liabilities of a business.
Owner’s financial interest in the business. / Net worth / Capital / Proprietorship

A

Owners Equity

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19
Q

When owner puts money into business - When revenue (income) is generated from sale of goods and or services

A

Owner’s equity Increases

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20
Q

When owner takes money out of business / Expenses that have been incurred.

A

Owner’s equity Decrease

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21
Q

Process of recording equal debits and credits for a single business transaction.

A

Double entry accounting

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22
Q

Any activity of a business enterprise that involves the exchange of values.

A

Transaction

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23
Q

Device for recording changes in fundamental accounting elements

A

Account

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24
Q

Increase Decrease Assets (A) Liabilities (L) Owner’s equity (OE)

A

**

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25
Q

left side of a standard account

“T” account

A

debit

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26
Q

right side of a standard account

“T” account

A

credit

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27
Q

The accounting equation

A 
Assets = liabilities + owner’s equity
					A = L + OE
				Use of “T” accounts
				Assets = liabilities + owner’s equity
				(+T-)	     (-T+) 	(-T+)
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28
Q

users of the accounting information:Company’s profitability and current financial condition

A

Owner

may consider additional investments, or consider closing depending on which way

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29
Q

users of the accounting information: Detailed measures of business performance

A

Managers

They make operating decisions, what type of inventory should be carried, can we hire more employees, etc.

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30
Q

users of the accounting information: Company’s profitability, debt outstanding, and assets that could be used to secure debt

A

Creditors

Should a loan be granted, if so, what amount

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31
Q

users of the accounting information: Company’s profitability, cash flows, and overall financial condition

A

Government agencies

How much income tax will the business pay

32
Q

classifications of businesses

A

service business
merchandising
manufacturing

33
Q

classifications of businesses: Travel agency
Physician
Computer consultant

A

service business

34
Q

classifications of businesses: a business that buys a product from another business to sell to customers
Department store
Pharmacy
Jewelry store

A

merchandising business

35
Q

classifications of businesses: a business that makes a product to sell
Automobile manufacturer
Furniture maker
Toy factory

A

manufacturing business

36
Q

an individual, association, or organization that engages in economic activities and controls specific economic resources

A

Business entity

37
Q

Business entity concept

A

 The business entity’s finances are kept separate from the owner’s nonbusiness assets and liabilities.
 The owner of the business may have business assets and liabilities as well as nonbusiness assets and liabilities.
 Nonbusiness assets and liabilities are not included in the entity’s accounting records

38
Q

If the owner invests money or other assets in the business, the item is now classified as a

A

business asset

39
Q

items owned by a business that will provide future benefits. Property of monetary value owned by a business

A

assets

40
Q

Assets must be owned and not rented, but doesn’t have to paid off. You could still be making payment on it.

A
41
Q

a probable future outflow of assets as a result of a past transaction or event. In other words, debts or obligations of the business that can be paid with cash, goods, or services. (Has already happened, I just haven’t paid for it.)

A

liabilities

42
Q

UNWRITTEN promise to pay a supplier for assets purchased or services rendered. Referred to as making a purchase “on account” or “on credit.”

A

accounts payable

43
Q
A

Be careful!!! Don’t confuse accounts receivable with accounts payable. Ask yourself, are we waiting to receive? Or waiting to pay?

44
Q

FORMAL WRITTEN promises to pay suppliers or lenders specified sums of money at definite future times. (I contracted myself in it.)

A

notes payable

45
Q

Amount by which the business assets exceed total liabilities of a business

A

Owner’s Equity

46
Q

Owner’s equity is also called

A

net worth or capital

47
Q

(income) is generated from sale of goods and or services

A

revenue

48
Q

Process of recording equal debits and credits for a single business transaction.

A

Double entry accounting

49
Q

Any activity of a business enterprise that involves the exchange of values

A

Transaction

50
Q

Left side of a standard account

A

debit

51
Q

right side of a standard account

A

credit

52
Q

standard account is known as

A

T account

53
Q

provide a description of the particular type of asset, liability, or owner’s equity affected by a transaction

A

account titles

54
Q

The accounting equation

A

Assets = liabilities + owner’s equity

55
Q

an economic event that has a direct impact on the business

A

business transaction

56
Q

3 rules for business transaction

A

 Usually requires an exchange with an outside entity
 We must be able to measure this exchange in dollars
 All business transactions affect the accounting equation through specific accounts

57
Q

separate record used to summarize changes in each asset, liability, owner’s equity of a business. Device for recording changes in fundamental accounting elements

A

Account

58
Q

Analyzing business transactions: Three questions

A

 What happened?
Make certain you understand the event that has taken place.
 Which accounts are affected?
Identify the accounts that are affected
Classify the accounts as assets, liabilities, or owner’s equity.
 How is the accounting equation affected?
Determine which accounts have increased or decreased
Make certain that the accounting equation remains in balance after the transaction has been entered.

59
Q

Owner’s equity Transactions:

Four types:

A

decrease- expenses and draw

increase- revenues and investments

60
Q

represent the amount a business charges customers for products sold or services performed.

A

revenues

61
Q

3 key facts about revenue

A

 The amount a business charges customers for products sold or services performed
 Recognized when earned (even if cash has not yet been received)
 Increases both assets (cash or accounts receivable) and owner’s equity

62
Q

represent the decrease in assets (or increase in liabilities) as a result of a company’s efforts to produce revenues.

A

expenses

63
Q

 Either decrease assets or increase liabilities, but ALWAYS decrease owner’s equity

A

expenses

64
Q

 The concept that income determination can be made on a periodic basis (month, quarter, year, etc.)

A

accounting period concept

65
Q

 Any accounting period of 12 months is called a

A

fiscal year

66
Q

reduce owner’s equity as a result of the owner taking cash or other assets out the business for personal use

A

Withdrawals (drawings)

67
Q

Three commonly prepared financial statements:

A

income statement
balance sheet
statement of owner’s equity

68
Q

Reports the profitability of business operations or a specified period of time
Expenses are subtracted from revenues to determine net income/loss
Also called the profit and loss statement or operating statement

A

income statement

69
Q

Report the activities that affected owner’s equity for a specific period of time
Uses net income from the income statement

A

statement of owner’s equity

70
Q

Confirms the accounting equation has remained in balance

Also referred to as a statement of financial position or statement of financial condition

A

balance sheet

71
Q

reports assets, liabilities, and owner’s equity on a SPECIFIC DATE, not a period of time

A

balance sheet

72
Q

three basic phases of the accounting process

A

input
processing
output

73
Q

debit =

A

credit

74
Q

left=

A

right

75
Q

dr =

A

cr

76
Q

A normal balance

A

is the side that increases

77
Q

 A listing of all accounts and their balances
 A totaling of debits and credits
 Is proof that debits equal credits and that the accounting equation has remained in balance
 Used as an aid in preparing financial statements

A

trial balance

Trakesha's 4th Quarter (20 decks)

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