Accounting equation
Properties (resources) of value owned by a business (cash, supplies, equipment, land).
Assets
Accounts and increase or decrease...
Paid Rent $1,000
Cash decrease
Expense increase
Type of business organization that has one owner. The owner is personally liable for paying the business's debts.
Sole proprietorship
System that measures the business's activities in financial terms, provides written reports and financial statements about those activities, and communicates these reports to decision-makers and others.
Accounting
Statement, as of a particular date, that shows the amount of assets owned by a business as well as the amount of claims (liabilities and owner's equity) against these assets; also known as statement of financial position.
Balance Sheet
Because of this GAAP the owner must withdraw cash to pay his/her personal assets. The owner cannot write a check out of the business account.
Business Entity
Rights or financial claims to the assets of a business by the owner (in the accounting equation, assets minus liabilities).
Owner's equity
Accounts and increase or decrease...
Provided services for clients on account $5,000
Increase Accounts Receivable (a/r)
Increase Fees Earned (Revenue)
Business that buys a product from a manufacturing company to sell to its customers.
Merchandise company
Procedures and guidelines that must be followed during the accounting process.
Generally accepted accounting principles (GAAP)
Accounting statement that details the performance of a firm (revenue minus expenses) for a specific period of time.
Income statement
When expenses are incurred in efforts to create revenue what happens to Owner's Equity?
Owner's Equity (Capital) decreases
Obligations that come due in the future; financial rights or claims of creditors to assets.
Liabilities
Accounts and increase or decrease...
Owner took $500 out of business for personal use.
Cash decrease
Withdrawals increase
Type of business organization that is owned by stockholders. Stockholders are usually not personally liable for the business debts.
Corporation
Recording function of the accounting process.
Bookkeeping
Financial statement that reveals the change in capital.
Statement of owner's equity
When you provide a service for a customer but they do not pay you cash what account do you track what they own you in?
Accounts Receivable
Rights or financial claims of creditors (liabilities) and owners (owner's equity) who supply the assets to a firm.
Equities
Accounts and increase or decrease...
Received electric bill and will pay it next month $120.
Increase Accounts Payable
Increase Expense
Business that makes a product and sells it to its customers.
Manufacturer
Accounting system that records revenue when cash is received and expenses when paid. This system does not match revenues and expenses.
Cash basis
The equation for the balance sheet.
A = L + OE
Revenue is earned whether cash is received or client promise to pay in the future.
Realization of Revenue (Revenue Recognition)
What is the Owner's Equity if:
Cash 10,000
Accounts Payable 2,000
Accounts Receivable 5,000
Equipment 3,000
Taxes payable 1,000
Owner's Equity = 15,000
Total Assets = 18,000
Total Liabilities = 3,000
Accounts and increase or decrease...
Received payment from clients that owed money $1,000
Increase Cash
Decrease Accounts receivable (a/r)
Type of business organization that is owned by a few members. Members are only liable to the extent of their investment.
Limited liability company
Accounting system that matches revenues when earned with expenses that are incurred.
Accrual basis
Calculation for Ending capital if there is an owner's investment, net income and a withdrawal for that period. (Think of the ways OE is increased and decreased.)
Beginning Capital + Additional Investments + Net Income - Withdrawals = Ending Capital.
When the business buys something from a vendor and they do not give the vendor cash right away the business tracks what they owe in this account.
Accounts Payable