Accounting 101
A, L, OE
Balance Sheet
GAAP
Potpourri
100
Resources owned or controlled by a company that have expected future benefits.
What are assets?
100
Owner's claim on assets
What is equity?
100
The types of accounts shown on the right side (or bottom) of a balance sheet
What are liabilities and owner's equity accounts?
100
Means that a business is accounted for separately from other business entities, including its owner.
What is the business entity assumption?
100

Proof of the mathematical accuracy of the ledger

What is a trial balance?

200
The collection of all accounts and their balances
What is a ledger? (or general ledger)
200
Obligations to transfer assets or provide products or services to others.
What are liabilities?
200
The order in which assets that last a short time are listed on the balance sheet.
What is liquidity order?
200
Assets are shown on the balance sheet at the cost of their acquisition or construction.
What is the cost principle?
200

A ratio less than one means that the business is unable to pay its short-term obligations.

What is current ratio?

300
A list of the names and account numbers of all the accounts in a ledger.
What is the chart of accounts?
300

Liabilities recorded when customers pay in advance for products or services

What is unearned revenue?

300
Statement from which the owner's equity balance is obtained for the balance sheet
What is Statement of Owner's Equity?
300

The principle that requires expenses be reported in the same period as the revenues that were recognized as a result of those expenses

What is the matching principle?

300

The term used for the expense of buying and preparing merchandise for sale.

What is cost of goods sold?

400
A system that has as its basic premise the rule that says that the debit amount must equal the credit amount for each transaction
What is double-entry accounting?
400

The balance in this account should equal net income after completing Steps 1 and 2 of the Closing Process.

What is Income Summary?

400
The balance sheet proves this
What is the accounting equation?
400

Combined with the cost principle, is the reason why we record accumulated depreciation in a separate contra account and report it on the balance sheet instead of directly crediting the asset account.

What is the full disclosure principle?

400
The business form that serves as the original source of information that a transaction has occurred
What is a source document?
500

The approach to preparing financial statements based on recording revenues when products and services are delivered and recording expenses when incurred

What is accrual basis accounting?

500
Payments that are made in advance
What are prepaid expenses?
500

The section of a classified balance sheet where you would find Accumulated Depreciation - Building.

What is Plant Assets?

500

The accounting principle that requires revenue to be recorded when goods or services are provided customers and at an amount expected to be received from customers

What is the revenue recognition?

500

The right side of a T-account

What is credit?

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