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42 Cards in this Set
- Front
- Back
Account |
an individual accounting record of increases and decreases in a specific asset or liability, or stockholders equity item. |
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What three parts are apart of an account |
1.Title 2.A left or debit side 3.A right or credit side |
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T-account |
Shows the basic account form |
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Debit |
indicates the left side of an account |
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Credit |
Indicates the right side of an account |
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why do we use debit and credit? |
to describe where entries are made in the accounts |
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what represents a receipt of cash in the tabular table? |
every positive item |
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what represents a payment of cash in the tabular table? |
every negative amount |
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The equality of debits and credits provides the basis for the ... |
double entry system |
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Assets normally show debit or credit balances? |
Debit |
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Liability accounts normally show debit or credit balances? |
credit |
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Common Stock |
companies issue common stock in exchange for the owners investments paid in to the corporation. |
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Are Debits or Credits the normal for Common Stock? |
Credits |
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Retained Earnings |
is net income that is kept (retained) in the business. It represents the portion of stockholders equity that the company has accumulated through the profitable operation of the business. |
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Are Debits or Credits the normal for Retained Earnings?
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Credits |
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Dividends |
is a company's distribution to its stockholders on a pro rata (equal) basis. Dividends reduce the stockholders claims on retained earings |
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What is the most common form of distribution |
cash dividend |
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Are Debits or Credits the normal for Dividends? |
Debits |
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`Revenues |
are a subdivision of stockholders equity that provides information as to why stockholders equity increased. |
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Are Debits or Credits the normal for Revenue?
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Credits |
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Expenses |
Expenses decrease stockholders equity. |
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Are Debits or Credits the normal for Expenses?
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Debits |
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Companies report common stock and retained earnings where? |
the stockholders equity section of the balance sheet |
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where are dividends reported? |
retained earnings statement |
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where are revenues and expenses reported? |
The income statement |
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Companies initially record transactions in ...? |
chronological order |
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Journal |
is referred to as the book of original entry. The journal shows the debit and credit effects on specific accounts |
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General Journal |
Has spaces for dates, account titles and explanations, reference, and two amount columns. |
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What are the three things that the general journal contributes to the recording process?
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1.It discloses in one place the complete effects of a transaction 2.It provides a chronological record of transactions 3.It helps to prevent or locate errors because the debit and credit amounts for each entry can be easily compared |
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Journalizing |
entering transaction data in the journal |
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What three things does a complete journal entry consist of? |
1.The date of the transaction 2.The accounts and amounts to be debited and credited 3. A brief explanation of the transaction |
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Simple Entry |
involve only two accounts |
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Compound entry |
Requires three or more accounts |
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Ledger |
The ledger provides the balance in each of the accounts as well as keeps track of changes in these balances |
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General Ledger |
contains all the assets, liability, and stockholders equity accounts. |
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Posting |
transferring journal entries to the ledger accounts |
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Chart of accounts |
This chart lists the accounts and the account numbers that identify their location in the ledger |
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What is the purpose of transaction analysis? |
The purpose is first to identify the type of account involved, and then to determine wether to make a debit or a credit to the account |
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Trial balance |
is a list of accounts and their balances at a given time. |
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When do companies prepare a trial balance? |
at the end of the accounting period |
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what are the three steps in preparing a trial balance? |
1. list the account titles and their balances in the appropriate debit or credit column 2.total the debit and credit columns 3.prove the equality of the two columns |
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What does not appear in journals or ledgers? |
dollar signs |