Basis of Financial Statements
The account used to record the owner's investments in a business.
What is the Owner's Capital Account?
It represents a general ledger account and is used to show the effects of transactions.
What is a T-Account?
It is not a financial statement but a tool for checking the equality of debits and credits in the ledger.
What is a trial balance?
The asset created by selling goods and services on credit.
What are Accounts Receivable?
Individuals and organizations that have rights to receive payments from a company.
What are creditors?
A record of increases and decreases in a specific asset, liability, equity, revenue, or expense.
What is an account?
The right side of a T-Account.
What is a credit?
The financial statement that lists the revenues and expenses and reports whether the business earned a profit or loss.
What is the Income Statement?
The account used by the seller to record payments received in advance from customers for products and services to be delivered in the future.
What is the Unearned Revenue Account?
A record of all accounts used by the company containing the transaction history and balance for each account.
What is a ledger?
Documents that identify and describe transactions and events entering the accounting system.
What are source documents?
The document where financial transactions of a business are initially recorded in order by date.
What is a journal?
The financial statement that is prepared second.
What is the Statement of Owner's Equity?
The account used to record a payment in advance of expenses expected to be incurred in future accounting periods.
What is a prepaid account?
The difference between the total debits and total credits for an account.
What is the account balance?
A company’s list of all ledger accounts with an identification number assigned to each account
What is the chart of accounts?
The process of transferring information from the journal to the general ledger.
What is posting?
The financial statement that most closely resembles the basic accounting equation?
What is the Balance Sheet?
These are the four subcategories of equity.
What are Owner's Capital, Owner's Withdrawals, Revenue, and Expense?
A financial ratio that measures an organization’s risk associated with liabilities.
What is the debt ratio?
This term is used to describe the side of the account where an increase in the account is recorded.
What is the Normal Balance?
The normal balance for an expense account is on this side of a T-Account.
What is the left side or debit side?
The financial statement that reports and organization's financial position at a point in time.
What is the Balance Sheet?
Owner investment in the company increase these two categories of accounts.
What are asset accounts and equity accounts?
The term used to identify the annual reporting period of a company.
What is fiscal year?