Structure of Accounting Flashcards
What are the 2 components of “equity”?
- Paid in Capital (PIC)
2. Retained Earnings (R/E)
What are the 2 components of retained earnings?
- Revenues
2. Expenses
What are the five basic elements of accounting? (ALERE)
- Asset
- Liability
- Equity
- Revenue
- Expense
Asset is used to generate _______ (definition of assets)
Future cash; Future economic benefit
On a T Table, what goes on the left side?
Asset, Expense
On a T Table, what goes on the right side?
Liability, Equity, Revenue
Liability is ______ of ______ (defintion)
Outflow; Asset
Net asset is ______ minus ______
Revenue; Expenses
What are the 3 types of companies? (SMM)
- Service
- Merchandising (retailers)
- Manufacturing
What are the 2 types of “trade payables” (AN)
- Accounts payable
2. Notes payable
What are the 2 types of “non-trade payables” (OB)
- Others payable
2. Borrowing
Revenue is the _____ of assets
Quick receipt (immediately liquefiable)
What are the basic steps of a transaction?
- Receipt of quick assets (e.g., cash receivable)
- Completeness of obligation
- Earned or Unearned revenue
What are the two types of “receivables?”
- Trade receivable
2. Non-trade receivable
Expenses include both _____ and _____
Paid; Payable (depends on whether asset has been consumed)
What are the 2 types of journalizing “inventory”?
- First in, First Out
2. Weighted Average
(Inventory) For Perpetual Inventory System, newly acquired inventory needs a new account called ____
Purchase
(Inventory) For Periodic Inventory System, all inventory (previously existing or newly acquired) goes under account called _______
Merchandise
(Inventory) When involving SALES and payments are received IN ADVANCE, you should record ______ in CR
Advanced (from “name of customer”)
Revenue is _____, whereas Gain is ______
Repetitive revenue; One-time revenue
Expense is ____, where as Loss is _____
Repetitive; One-time
“Let the _____ follow the ______”
Expense; Revenue
What are the 3 types of expenses? (CSI)
- Causal relationship (e.g., COGS-sale)
- Systematic & Rational Allocation (e.g., depreciation)
- Immediate Recognition (e.g., insurance, supplies, salaries, etc.)
What are the 3 types of “depreciation”?
- Physical/Actual usage method (actual use/total use)
- By time (straight line depreciation)
- Accelerated method
What does “IFRS” stand for?
International Financial Reporting Standard
Accounting information must be _____ and ______
Relevant (probable); Faithful (measurable with certainty)
The only way that liabilities may be reduced is to reduce ______
Unearned revenues (i.e., reduced payables, etc.)
Total non-owner changes in equity (comprehensive income) is ______ plus _______
- Net income
2. OCI
What are the 4 types of OCIs?
- Available-for-sale securities
- Pension
- Derivatives
- Translation gain/loss (forex)
R/E = ?
Prior R/E - Dividends + Net Income
AOCI = ?
Prior OCI + OCI
Net income + OCI = ?
Comprehensive Income (CI) / Total Non-Obnbwner Change
