Test 1 Flashcards
What is the Accounting Equation?
Assets=Liabilities+Stockholder Equity
What falls under Stockholder Equity?
Common Stock and Retained Earnings
What falls under Retained Earnings?
+Revenues
- Expenses
- Dividends
What goes on a balance sheet?
Assets
Dividends
Expenses
What goes on an income statement
1) Expenses
2) Liabilities- In order of maturity
3) Stockholder Equity-contributed capital-retained earnings
4) Revenues
What are some Debits
Assets
Dividends
Expenses
What are some Credits
Liabilities
Stockholder Equity
Revenues
Debits go on which side?
Left side
Credits go on which side?
Right side
Which comes first, Debits or Credits on an entry?
Debits first, Credits second
What is called when cash is recognized prior to revenue being recognized?
Unearned Revenue
What is it called when cash is recognized after revenue is recognized?
Accounts Receivable
What is called when cash is recognized when revenue is recognized?
Cash
What is a prepaid expense?
Allocating previously recorded assets to expense
– i.e., expensing an item that you paid early.
What is a Unearned Revenue?
Allocating previously recorded unearned revenue to earned revenue
– i.e., recognizing as income a “sale” for which you had been paid early
What is an Accrued Expense?
Recording operating expenses that have not yet been paid or recorded
– you have incurred the expense, but YOU still owe the money
Accrued Revenues
Recording revenue that has been earned, but not yet been received or recorded – you have earned the revenue, but YOU are still OWED the money
Prepare statements in following order:
Income Statement
Statement of Stockholders’ Equity
Balance Sheet
Statement of Cash Flows
What happens to temporary accounts?
They are zeroed out at the end of an accounting period
What happens to the balance of temporary accounts?
They are transferred to retained earnings
What happens to dividends?
They are closed to retained earnings
What goes on a balance sheet?
Assets, Liabilities, Stockholder equity
What is an income statement
The financial results of a given time period
When does net income occur?
When revenues are greater than liabilities
What is a statement of stockholders equity?
Reports the events that cause increase or decrease in stockholder equity
Retained Earnings
Increase with net income increasing and vice versa
statement of cash flows
reports a business’s cash inflows and cash outflows during
a given period of time
Give the order of financial statements
1) Income Statement 2) Statement of Stockholders Equity 3)Balance Sheet 4) Statement of Cash Flows
What gets decreased when a divedend is issued?
Cash
Typical Assets
Cash Accounts Receivable Office Supplies Prepaid Rent Office Equipment Accumulated Depreciation—Office Equipment
Typical Liabilities
Accounts Payable Interest Payable Wages Payable Unearned Revenue Notes Payable
Typical Equity
Common Stock
Retained Earnings
Dividends
Typical Revenues
Anytime a company is payed for a job
Typical Expenses
Supplies Expense Wage Expense Rent Expense Depreciation Expense—Office Equipment Interest Expenses
What is a liability
obligations or debts that a business must pay in cash or in goods and services at some future time as a consequence of past transactions or events
What is an asset
the economic resources of a business that can be expressed in monetary terms. Assets take many forms.
Is ACCT Receivable an Asset?
Yes
What is Accounts Payable?
A liability
What is debt financing
Financing from an outside source like a bank
What is Equity Financing
financing via stockholders
What is the Sarbanes-Oxley Act
2002 regulation that forces companies to do things so they dont cheat
What are expenses
are decreases in a company’s resources from generating revenue. Expenses are generally measured by the value of the assets used up or exchanged as a result of a businesses operating expenses
What is contributed capital
a measure of the capital contributed by the stockholders of a company when they purchase ownership shares in the company
Earned capital
a measure of the capital that is earned
by the company, reinvested in the business, and not distributed to its stockholders—that
is, its retained earnings
Retained earnings
are increased when operations produce net income and decreased when operations produce a net loss.
What is an annual report called?
10-K
General Ledger
Holds all transactions
Accrual
increasing expenses and increasing revenues
Contra Account
used to record reductions in, or off-
sets against, a controlling account
