Accounting 1
What is the term for a resource owned by a business that is expected to provide future economic benefit?
An Asset
Left side of account
Define cash at bank
the money the business has available at the bank
Define Accounts payable
Money owed by the business
True or False: Drawings is an expense
False
Name an Asset
Land, vehicle, cash, etc.... *(Miss Kenny gets final say)
What does Credit mean
Right side of an account
Define accounts Rec
The money a customer owes to the business
Define bank loan
Borrowed money that must be repaid overtime
If a business buys $5000 computer , does profit decrease
No, buying an asset does not decrease profit
What is the Accounting Equation
Which side increases assets
Debits increase assets
Define inventory
Goods held for resale
Define unearned revenue
If you receive cash, does that mean you've earned revenue
Not always, could be a loan, capital, or accounts rec being paid
What is good will
a Businesses reputation
Which side decreases liabilities
assets
Define equipment
Long-term assets used to operate the business
Is accounts rec money that the business already has
No, its money owed not received
What is the order of liquidity
1.Cash
2. Accounts rec
3. inventory
Why must Assets = Liabilities
to keep the accounting equation balanced
Define Prepaid expense
Payments made in advance for future benefits
Define Mortgage payable
Long-term loan secured by property
If liabilities go down does the business get richer
not necessarily, depends on which liability goes down