Accounting Principles
the Accounting Equation
Assets = Liabilities + Equity
Anything of value or that is owned
Asset
What accounts is considered a Liability?
Accounts Payable
The language of business
Accounting
Your business pays cash for supplies.
Cash, Supplies
What is the difference between an Asset and a Liability?
An Asset is something you own.
A Liability is something you owe.
the process of planning, recording, analyzing and interpreting financial information
Accounting
What accounts are considered Assets?
Cash, Prepaid Insurance, Supplies, Accounts Receivable
What account titles would be affected if you made a sale and were going to be paid at a future date?
Revenue, Accounts Receivable
Your business pays cash for insurance.
Cash, Prepaid Insurance
How many accounts are affected with one business transaction?
2
a formal report that shows what an individual owns, what an individual owes, and the difference between the two.
Net Worth Statement
the cost of goods or services used to operate a business (aka the costs a company incurs to generate revenue)
Expense
What are the Account Titles affected for when a sale is made with cash?
Cash, Capital
The business has cash taken out for the owner’s personal use.
Cash, Withdrawal
Any time a business spends money, receives money, or owes money.
Business Activity (Transaction I'll accept)
a person or business to whom a liability is owed
creditor
amount to be received in the future due to sale of goods or services is considered which account?
Accounts Receivable
What are the Account Titles affected for when an investment is made with cash?
Capital, cash
Your company buys insurance on account.
Prepaid Insurance, Accounts Payable.
What are the 2 Account Titles affected from Sold Services on Account?
Revenue, Accounts Receivable
What does GAAP stand for?
Generally Accepted Accounting Principles
What are the 3 types of transactions that affect the Capital account?
Revenue, Expenses, Withdrawal
a sale for which payment will be received at a later date
Sale on Account
Your business sells services on account.
Capital (Revenue), Accounts Receivable