The Framework
An information and measurement system that identifies, records, and communicates an organization's business activities
What is accounting?
The relationship between assets, liabilities and equity is expressed in this formula.
What is the accounting equation: Assets = Liabilities + Equity?
Which Financial Statement provides valuable information about economic resources the company owns as well as debts the company owes?
The Balance Sheet
Accounting guidelines primarily established by FASB and its predecessors are called what?
Generally Accepted Accounting Principles (GAAP)
The collection of all accounts and their balances
What is the general ledger?
The agency that oversees the creation and governance of accounting standards in the US
What is Financial Accounting Standards Board (FASB)?
All assets always have (by default) what type of normal balance?
Debit Normal Balance
Accounts Payable appears on this financial statement.
What is the Balance Sheet?
The four main principles of GAAP
What are Revenue Recognition. Measurement/Cost Principle. Expense Recognition/Matching. Full Disclosure.
The process of transferring information from the journal to the ledger.
What is Posting?
The International Accounting Standards Board (IASB) issues these to identify preferred accounting practices outside the US
What are International Financial Reporting Standards (IFRS)?
The left side of every T-account always implies which effect on each account?
Debit.
Convert the Statement of Owner's Equity into a formula.
Beginning Capital + Net Income (- Loss) - Withdrawals = Ending Capital
The accounting principle that requires accounting information to be based on actual cost and requires assets and services to be recorded initially at the cash or cash-equivalent amount given in exchange
What is the measurement/cost principle?
Journalize this transaction correctly.
Business Solutions bills Easy Leasing $1000 for building a new website for them.
Debit Accounts Receivable $1,000 and Credit Computer Services Revenue $1,000
The rule of accounting which dictates that each transaction has dual effects
What is Double-entry accounting?
What type of account is Unearned Revenue? Therefore, its normal balance is what?
Liability account; Credit Normal Balance
What is the correct order of the Financial Statements?
(1.) Income Statement (2.)Statement of Retained Earnings (3.)Balance Sheet (4.)Statement of Cash Flows
The rule that requires revenue to be recognized when (1) goods or services are provided to customers and (2) at the amount expected to be received from the customer
What is revenue recognition?
Journalize the following transaction.
Emerson Company purchased $3,000 worth of supplies on account from Adobe Inc.
Debit Supplies $3,000; Credit Accounts Payable $3,000
Sole Proprietorship, Partnership, Corporation, Limited-Liability Company (LLC)
What are the four common business entities listed in our text?
According to the expanded accounting equation, all Withdrawals and Expenses have a Debit normal balance, what effect does this have on equity?
Any increase to Withdrawals and Expense results in a decrease of equity.
Summarize the Net Income calculation into a formula.
Net Income (Net Loss) = Revenues - Expenses
This rule prescribes that a company record its expenses incurred to generate the revenue reported.
What is expense recognition/matching?
Journalize the following transaction.
Honda Corporation received $20,000 from Luka's Trucking Company for services not yet performed.
Debit Cash $20,000; Credit Unearned Revenue $20,000