Foundation
Assets=Liabilities+Owners Equity
What is the accounting equation
The analytical tool used to keep track of account changes in one account. (informal GL)
What is the t-chart/t-account?
These are done at the end of the accounting cycle.
What are financial statements?
Entries made to update the accounts during the accounting cycle. One is a BS account, one is an IS account.
What are adjusting entries?
The Father of Accounting.
Who is Luca Pacioli?
Journal entries that are needed in order to update specific ledger accounts to reflect correct balances at the end of an accounting period.
Adjusting Entries
FBI accountants played a huge part in bringing down this american gangster and businessman known as "Scarface".
Who is Al Capone?
Financial information is recorded and reported separately from the owner's personal financial information.
What is BUSINESS ENTITY?
Business transactions are reported in numbers that have common value.
.
What is UNIT OF MEASUREMENT?
Owner's Equity can be described as this.
What is the value of your business
Two things that always take place in a transaction.
What are debit and credit?
This statement shows net gain or net loss.
What is the income statement?
These are temporary capital accounts.
What are Revenue, Expenses and Drawing*?
*-also know as withdrawals Income summary can be included as well.
This is what you have to write down on the journal when you post a transaction from the journal to a ledger account to show that it has been posted.
What is post reference/GL account number?
Accounts whose balances are carried over to the next accounting period
Permanent (real) accounts
Why don't skunks have to pay taxes?
Because they only have one scent.
Financial statements are prepared with the expectation that a business will remain in operation indefinitely.
What is GOING CONERN?
Revenue is recorded at the time goods or services are sold.
What is REALIZATION of REVENUE?
This is a required list of all of the accounts in a business.
What is chart of accounts?
This is where transactions are recorded.
What is the general journal.
All three parts of the accounting equation are shown.
What is the balance sheet?
The first step in completing the end-of-cycle accounting, which is optional and sometimes is referred to as a scrap piece of paper.
What is creating a worksheet?
Name two account categories that always carries a credit balance. (An example of a category is Expense, Asset, ...)
What is Revenue, Capital, Liabilities or a contra Asset account?
Accounts whose balances at the end of an accounting period are not carried over to the next accounting period.
Temporary (nominal) accounts
Why did the IRS audit the chiropractor?
He owed back taxes.
The actual amount paid for merchandise or other items bought is recorded.
What is HISTORICAL COST?
The revenue from business activities and the expenses associated with earning that revenue are recorded in the same accounting period.
What is MATCHING EXPENSES WITH REVENUE?
Accounting principles that must be followed
What is GAAP?
This is what happens when transactions are recorded to the ledgers.
What is posting?
This statement shows the changes in capital for the period.
What is a Statement of Owner's Equity?
Income Summary always closes to this account.
What is Capital?
This is created after all the end-of-cycle posting has been completed.
What is post-closing balance?
Journal entries that are prepared to (a) reset all temporary accounts to a zero balance and (b) update Capital to a new balance.
Closing Entries
What do Accountants suffer from that normal people don’t?
Depreciation
A source document is prepared for each transaction.
What is OBJECTIVE EVIDENCE?
Business activities creating dollar amounts large enough to affect business decisions should be recorded and reported as separate items in the accounting records and financial statements.
What is MATERIALITY?
Temporary Owner's Equity Accounts
What are Revenue, Expenses, and Withdrawals (Drawing)?
Provide services on account. The account debited and credited.
What is debit Accounts Receivable and credit Fees Earned?
This account sums up all the expenses, withdrawals, revenue and investments for this particular part of the equation.
What is capital?
All of these accounts close at the end of an accounting cycle.
What are temporary accounts?
The rules that accountants follow in the U.S.
What are GAAPs?
Generally Accepted Accounting Principles.
Temporary account in the ledger that summarizes revenue and expenses and transfers the balance (net income or net loss) to Capital.
Income Summary
Why did CPAs finally call off their on-again, off-again romance?
They couldn’t reconcile their differences.
Financial statements contain all information necessary to understand a business’s financial condition.
What is FULL DISCLOSURE?
What is FASB (Financial Accounting Standards Board)?