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Accounting 101
A, L & OE
Accounting Cycle
Vocabulary
Miscellaneous
100

The 8-step process that begins when a transaction occurs and ends with its inclusion in the financial statements.

Accounting Cycle

100
These are items owned that have monetary value
What are assets?
100

This inventory cost method assumed the most recent items purchased are the first to be sold.

LIFO

100

These accounts belonged in the Balance Sheet that has a carrying balance and never closes out at the period end.

What are permanent accounts?

100
When a business buys a computer with cash, its cash ______, but its computer equipment ________
What decreases and increases?
200
This is the purpose of accounting
What is to 1)identify, 2)record and 3)communicate financial information?
200

The fundamental accounting equation

Assets=Owner's Equity+Liabilities?

200
The business or person selling the item on credit, can be any person/business you owe money to
Who is a creditor?
200

These accounts belonged in the Income Statement and it has to be closed out (zeroed out) at period end.

What is temporary accounts?

200
In addition to an owner, these people also have claims against a company's assets.
Who are creditors?
300
These represent the types of business organizations that use accounting.
What are 1)sole proprietorships, 2)partnerships and 3)corporations?
300
This line on the balance sheet refers to money owed by a company
What is Accounts Payable?
300
Identify the accounts affected Classify the account affected Determine the amount of increase or decrease for each account affected Make sure the accounting equation remains in balance
What is analyze a business transaction?
300
When you buy something and agree to pay for it later
What is Credit?
300

This account with a credit balance always sticks with the asset account and decreases the balance of that asset.

Contra Asset

400

Ownership and risk pass onto buyer when goods are placed on sellers truck and ready for delivery.

FOB shipping point
400
This is the difference between total assets and total liabilities.
What is Owner's Equity?
400

This type of entry is performed at the end of an accounting period to reflect the transaction or vent that is not yet recorded.

Adjusting Entry

400
Property or items of value owned by a business
What is assets?
400

Part of the adjusting entry at period end to reduce the value of PP&E.

Depreciation Expense

500

A financial transaction that involves at least two different accounts.

Double Entry

500

Balance of money due to a firm for goods or services delivered or used but not yet paid for by customers.

Account Receivable

500

The expense of buying and preparing merchandise is called?

Cost of goods sold

500
Is a list of all accounts used by a business.
What is chart of accounts?
500
Income earned from the sale of goods or services is called?
What is revenue?