QUIZ CH 2 Flashcards
What is a transaction?
Any event that has a financial impact on a business and can be measured reliably.
What is an account?
The record of all the changes in a particular asset, liability, or stockholders’ equity during a period.
What is an asset?
Assets are economic resources that provide a future benefit for a business.
What is inventory?
Inventory includes all the tangible goods a company holds for sale or production.
What is prepaid rent considered?
A prepaid expense is an asset because it provides a future benefit for the business.
What is retained earnings?
The retained earnings account shows the cumulative net income earned by the corporation over the company’s lifetime, minus its cumulative net losses and dividends.
Difference between equity in proprietorship vs partnership?
In a proprietorship, there is a single equity account. For a partnership, each partner has a separate equity account.
Do revenues increase or decrease stockholders equity?
Revenues increase stockholders’ equity.
Do expenses increase or decrease stockholders equity?
Expenses decrease stockholder’s equity.
What’s on the income statement?
revenues, expenses, net income
What’s on the balance sheet?
assets, liabilities, equity.
What is on the statement of retained earnings?
beginning retained earnings +/- net income - dividends = ending retained earnings
what is a ledger?
grouping of all the T-accounts, with their balances.
