Terminology
Any person to whom a business owns money
What is a creditor
Assets are $15,000 Equity is $8,500 What are liabilities?
What is $6,500
This statement represents the accounting equation
What is balance sheet
This states that assets and services should be recorded at their actual (also called historic) cost
What is the cost principle
Cash
What is an asset
Designed to provide people outside the organization with information about the company
What are financial records
What two areas of the accounting equation are affected when you buy supplies on account?
What is assets and liabilities
Summary of business's revenues and expenses for a period of time
What is an income statement
The accounting standards and concepts used in the preparation of financial statements
What are Generally Accepted Accounting Principles (GAAP)
These accounts do not show up on the Balance Sheet
What are temporary accounts
Economic resources that are expected to benefit the company in the future
What are assets
Another way to say the right side must equal the left side
What is Debits = Credits
Period of time that financial statements can be prepared for
What is any time period
This rule requires expenses to be recorded in the same period they are incurred
What is the matching principle
Revenues and period expenses
What are equity accounts
The art of interpreting, measuring, and describing economic activity
What is accounting
Cash $10,000 Supplies $900 Land $25,000 Capital $30,000 What are liabilities?
What is $5,900
What order are financial statements prepared in?
What is income statement, statement of owner's equity and balance sheet
This rule assumes that a business's activities can be separated into segments
What is time period concept
Capital Stock
What is equity
The balance that appears on the increasing side of an account
What is normal balance
If total assets equal $375,600 and total liabilities equal 172,500, the total equity must be
What is $203,100
This is not an official financial statement but is prepared to check for accuracy of the ledger
What is a trial balance
This rule is determined by hitting performance obligations
What is revenue realization
A customer's promise to pay in the future for goods or services
What is Accounts Receivable