Accounting Basics

Two (Because of double-entry, every transaction will affect at least two accounts.)

Accounting entries involve a minimum of this many accounts.

Cost due to the cost principle.

Assets are usually reported on the balance sheet at this amount.

Stockholders' Equity or Owner's Equity (net assets if a nonprofit)

Assets minus liabilities equals __________.

Debits

Entries to expenses such as Rent Expense are usually ___________.

Credits

Entries to revenues accounts such as Service Revenues are usually ___________.

Payable

Liabilities often have the word __________ in their account title.

Liabilities

Obligations (amounts owed) are reported on the balance sheet and are referred to as this.

Assets

Resources owned by a company (such as cash, accounts receivable, vehicles) are reported on the balance sheet and are referred to as ___________.

Net Income

Revenues minus expenses equals __________.

Income Statement

The financial statement that reports the revenues and expenses for a period of time such as a year or a month is the _________.

Chart of Accounts

The listing of all of the accounts available for use in a company's accounting system is known as the ______________.

Statement of Cash Flows

This financial statement explains how a company's cash balance changed during the accounting period __________.

Balance Sheet

This reports assets, liabilities, and stockholders' equity.

Debit

This term is associated with "left" or "left-side".

Credit

This term is associated with "right" or "right-side".

Debit

This will usually cause an asset account to increase.

Credit

This will usually cause the liability account Accounts Payable to increase.

Expense Matches The Revenues Or Is Used Up

Under the accrual basis of accounting, expenses are reported in the accounting period when this happens.

Service or Goods Have Been Delivered

Under the accrual basis of accounting, revenues are reported in the accounting period when this happens.

Liability (The company that is to perform the service or is to deliver the product has received the cash in advance and therefore has an obligation (liability) to deliver the service or the product.)

Unearned Revenues is this type of account.

Credited

When a company pays a bill, the account Cash will be _____________.

Debited

When cash is received, the account Cash will be _____________.