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50 Cards in this Set
- Front
- Back
Profit |
increase in owner’s equity that results from successful operation of abusiness. |
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Revenue |
amounts earnedfrom sale of goods or services during routine operation of business |
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Expenses |
costs ofitems or services used up in the routine operation of a business. |
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Net Income |
differencebetween revenue and expenses when revenue is greater than expenses |
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Net Loss |
differencebetween revenue and expenses when revenue is less than expenses |
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Income Statement |
presents revenue,expenses, net income/loss for a specific period of time |
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Accounting Period |
Period of timecovered by financial statements |
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Time-Period Principle |
requires thedefinition and use of the same period of time for each accounting period |
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Accrual Basis of Accounting |
Matches revenue earned with expenses incurred toproduce that revenue during the accounting period |
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Revenuerecognition principle |
statesthat revenue is recognized at the time the revenue is definitely earned |
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Revenueincreases owner’s equity |
N/A |
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Cash basis of accounting: recognizes revenue and expensesonly when cash changes hands |
N/A |
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Revenue is recorded on the credit side |
N/A |
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Expenses decrease owner’s equity |
N/A |
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Expenses are recorded on the debit side |
N/A |
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Drawings |
the account that records the withdrawal of assets on theleft side and the liabilities and owner’s equity on the right side |
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Accountingform balance sheet |
lists the assets on the left side and the liabilities andowner’s equity on the right side |
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Reportform balance sheet |
liststhe assets, liabilities and owner’s equity vertically |
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The income statement is prepared before the balance sheet |
N/A |
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Condensedstatement |
a financial statement that provides single totals for keyitems to highlight certain information |
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Journalizing
|
recording transactions in a journal |
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Journal |
record of transactions recorded in chronological order |
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General Journal |
often main journal of a business |
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The year and month are shown on each journal page |
N/A |
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Debit is shown first |
N/A |
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Credit is indented |
N/A |
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The explanation incudes an invoice or cheque # |
N/A |
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Journal |
presents a chronological history of all the company’s transactions |
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For every debit amount there must be an credit amount. |
N/A |
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Posting |
the transfer of information from a journal to the general ledger |
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Balance column ledger account |
a three column account that provides a running balance on each line. |
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The DR./CR. (debit/credit) column indicates whether the balance is a debit or a credit. |
N/A |
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Chart of accounts |
a list of names and account numbers of all the accounts in a ledger. |
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Audit |
a systematic check of accounting records and procedures by an accountant |
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Opening Entry |
records assets, liabilities, and OE in a journal when a business first begins operations. |
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Compound Entry |
has more than one credit |
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A trial balance is proof of the mathematical accuracy of the ledger. |
N/A |
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Accounting Cycle |
set of accounting procedures performed in each accounting period. |
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Source Document |
any business form that serves as the original source of info that a transaction has occurred. A source doc must be prepared for all cash sales by a business transaction. |
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Cash Sales Slip |
provides details of the sale is prepared for all cash sales by a business. |
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Sales Invoice |
bill completed by the seller and given to the buyer as a record of acredit sale |
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Purchase Invoice |
bill received by purchaser us proof of a purchase on account. |
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Cheques are issued by a business to make cash purchases and to pay bills. |
N/A |
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Endorsement |
signature placed on back of a check by the person or companydepositing the check |
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Restrictive Endorsement |
an instruction on the back of a check to control whathappens to the funds. |
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Cheques are received as payments for amounts owed or when customers buysomething for cash. |
N/A |
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Bank Credit Memo |
is used as basis for increasing a customer’s bank account. |
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Bank Debit Memo |
used as the basis for decreasing a customer’s bank account. |
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Principle of Objectivity |
Requires that the accounting data should be free fromany bias and should be verifiable to support the value used to record transactions. |
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Data Entry Sheet |
used to organize the information to be entered into acomputerized accounting system. This includes accounts to be debited and credited, the amount, and the explanation of the transaction. |