Management Lesson 5.2

4. The left side of a T account is known the _________ side.

Debit

18. In a T account format, credits signify increases in which accounts?

Liabilities Capital Revenue

19. In a T account format, debits signify decreases in which accounts?

Liabilities Capital Revenue

16. What is the definition of a balance sheet?

(a snapshot of a company's financial position) A formal financial statement illustrating the assets, liabilities and owner's equity of a business as of a specific date.

Balance Sheet (Statement of financial position or a statement of financial condiiton)

(a snapshot of a company's financial position) A formal financial statement illustrating the assets, liabilities and owner's equity of a business as of a specific date. Also called a Statement of financial position or a statement of financial condition

Footing

(pencil footing) A total, written in small pencil figures, under the last entry in a column of an account -The total of each side of a group of transaction in a T account

15. In what order are the three major financial statements prepared?

1. Income statement 2. Statement of Owner's Equity 3. Balance sheet

7. What are the three main financial statements commonly prepared by a business?

1. Income statement 2. Statement of Owner's Equity 3. Balance sheet

5. Define a statement of owner's equity.

A formal financial statement which summarizes all of the change's in owner's equity during a specified period of time. Also called a Statement of net worth)

Statement of owner's equity (capital account)

A formal financial statement which summarizes all of the change's in owner's equity during a specified period of time. Also called a Statement of net worth)

12. Define an income statement.

A formal statement which presents the income, expenses and resulting net profit or net loss for a given period

1. Define a T account.

A skeleton form of an account used for instructional purposes

T account

A skeleton form of an account used for instructional purposes This format has the advantage of providing two sides for each account; one side is used to record increases in the account and the other side is used to record decreases

10. Define a trial balance.

A work paper proving the equality of the debit and credit balances in the ledger

Trial balance

A work paper proving the equality of the debit and credit balances in the ledger

Income Statement ( profit and loss statement; statement of operations; operating statement)

Also called a profit and loss statement; statement of operations; operating statement A formal statement which presents the income, expenses and resulting net profit or net loss for a given period

17. In a T account format, debits signify increases in which accounts?

Assets Drawing Expenses

20. In a T account format, credits signify decreases in which accounts?

Assets Drawing Expenses

2. Define a financial statement.

Records that outline the financial activities of a business, an individual or any other entity; meant to present financial information of the entity as clearly and concisely as possible for both the entity and for readers

Financial Statement

Records that outline the financial activities of a business, an individual or any other entity; meant to present financial information of the entity as clearly and concisely as possible for both the entity and for readers

6. When revenue (profit) is greater than expenses, a ______________ is reported.

net income

11. When expenses exceed revenue, a ________________ is reported.

net loss

13. What are two other names for the income statement?

profit and loss statement statement of operations operating statement

8. Of the three main financial statements, this one that is dated as a single point and time of a business' financial year.

balance sheet

14. The right side of a T account is known as the __________ side.

credit

Net Loss

The difference between gross profit and expenses when expenses are larger Expenses are greater than revenues

Net Income (bottom line, net profit)

The difference between gross profit and expenses when gross profit is larger Revenues are greater than expenses

Normal balance (account balance)

The difference between the total debits and the total credits in an account

Debit

The left side of a standard account

9. Define a normal (account) balance.

The plus side of a T account The debit or credit balance that would be expected in a specific account in the general ledger. For example, asset accounts and expense accounts normally have debit balances

Credit

The right side of a standard account

3. The totals at the bottom of T accounts are referred to as?

footings