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Terminology 1
Recording Transactions
Accounting Standards and Key Concepts
Account Rules
Terminology 2
100
This is a group of accounts.
What is a ledger?
100
Cash: increases on Debit side Accounts Receivable: decrease on Credit side
What accounts should we use if you receive cash on account?
100
Requires that in recording transactions, the total of the debit amounts must always equal the total of the credits amounts.
What is double entry accounting?
100
They increase on the right side of the account.
On which side of an account do assets increase?
100
Always an exchange of things of value.
What are business transactions?
200
This refers to the Left Side of an Account.
What is a Debit?
200
Equipment: Increases on Debit side Accounts Payable: Decrease on Credit side
What accounts should we use if we purchase equipment on account?
200
Are located on the left side of balance sheet.
What are assets?
200
They increase on the left side of the account.
On which side of an account do Liabilities and Owner's Equity increase?
200
The period of time covered by financial statements.
What is an accounting period?
300
This refers to the Right Side of an Account.
What is a Credit?
300
Account Payable: increase on Debit side Cash: decrease on Credit side
What accounts to use if you pay cash on account?
300
Are located on the right side of the balance sheet.
What are Liabilities and Owners Equity?
300
Total balances must equal total credit balances.
What is the rule of total debit and credit balances?
300
Is listed on a stock exchange and is accountable to the public.
What is a public business?
400
This is a form in which changes to an item caused by transactions are recorded.
What is an Account?
400
Cash: increase on Debit side Capital: increase on Credit side
What accounts should we use if the owner invested money into the business?
400
Proves the mathematical accuracy of ledger.
What is the trial balance sheet?
400
The difference between the totals of two sides of an account.
What is the account balance?
400
Non-profit organizations similar to banks that are operated by employees of a company or organization.
What are credit unions?
500
These are the principles, rules, and guidelines followed when preparing and presenting information.
What are the Accounting Standards?
500
Supplies: increase on Debit side Cash: decrease on Credit side Accounts Payable: increase on Credit side
What accounts should we use if we buy supplies on account and make a down payment as well?
500
Assets = Liabilities + Owner's Equity
What is the balance sheet equation?
500
The side of the account with the highest total.
Where is the account balance placed?
500
Uses the current fair market value of the assets for the financial reports.
What is the fair value principle?