TERMS
An event directly affecting an economic entity that can be expressed in terms of money and that must be recorded in the accounting records.
BUSINESS TRANSACTION
ASSETS = LIABILITIES + OWNERS EQUITY
FUNDAMENTAL ACCOUNTING EQUATION
PREPAID INSURANCE, PREPAID RENT
ASSETS
An equation expressing the relationship of assets, liabilities, and owner’s equity.
FUNDAMENTAL ACCOUNTING EQUATION
The present worth of an asset or the amount that would be received if the asset were sold to an outsider on the open market.
FAIR MARKET VALUE
The process of analyzing, classifying, recording, summarizing, and interpreting business transactions in financial or monetary terms.
WHY IS ACCOUNTING USED FOR MAKING FINANCIAL DECISION
OWNERS EQUITY AND LONG TERM OBLIGATIONS
WHAT IS THE RELATIONSHIP BETWEEN OWNERS EQUITY AND LONG TERM OBLIGATIONS
CREDIT TO CASH AND DEBIT TO EQUIPMENT
2 ACCOUNTS FOR A PURCHASE BY CHECK
A liability account used for short-term obligations or charge accounts, usually due within 30 days.
ACCOUNTS PAYABLE
The present worth of an asset or the amount that would be received if the asset were sold to an outsider on the open market.
EXPENSES
A business enterprise, separate and distinct from the persons who supply the assets it uses.
BUSINESS ENTITY
The official list of account titles to be used to record the transactions of a business.
CHART OF ACCOUNTS
CASH
ACCOUNTS RECEIVABLE
ACCOUNTS PAYABLE
OWNERS EQUITY
CHART OF ACCOUNTING LISTING ORDER
ACCOUNTS RECEIVABLE AND REVENUE
2 ACCOUNTS AFFECTED BY A CREDIT SALE
The taking of cash or other assets out of a business by the owner for his or her own use. (This is also referred to as drawing.) A withdrawal is treated as a decrease in owner’s equity.
OWNERS DRAWING OR WITHDRAWAL
A business enterprise, separate and distinct from the persons who supply the assets it uses.
CAPITAL
The taking of cash or other assets out of a business by the owner for his or her own use. (This is also referred to as drawing.) A withdrawal is treated as a decrease in owner’s equity
OWNERS EQUITY WITHDRAWAL
The totals of each side of a T account.
FOOTINGS
A form of account shaped like the letter T in which increases and decreases in the account may be recorded. One side of the T is for entries on the debit or left side. The other side of the T is for entries on the credit or right side
T ACCOUNT
EACH SIDE CAN INCREASE AND DECREASE
T ACCOUNT
The owner’s investment, or equity, in an enterprise.
OWNERS CAPITAL
A list of all account balances to prove that the total of all debit balances equals the total of all credit balances.
TRIAL BALANCE
NAME OF FIRM
NAME OF STATEMENT
PERIOD
FINANCIAL STATEMENTS HEADINGS
LEFT SIDE RIGHT SIDE
ASSETS LIABILITIES
EXPENSES REVENUE
DRAWING OWNERS EQUTI
ACCOUNTS TYPES THAT INCREASE ON THE LEFT SIDE AND THE RIGHT SIDE
A financial statement showing the results of business transactions involving revenue and expense accounts over a period of time
INCOME STATEMENT