Accounting Chapter 2

invoice

A time standard doc that shows goods/services sold and owed

The _________________ is often referred to as the balance sheet equation since it highlights the structure of the balance sheet.

Accounting Equation

On account

Accounts payable

Example: Ferdlinand withdrew money from business.

Accs: Ferdlinand's Distribution, Cash Sheets: Balance sheet Increased

Net income

Amouny I earn - the amount I spend (Revenue - Expense)

Sale on Account

An agreement to provide a good or service in exchange for payment at a later date

Sale On Account

An agreement to provide a good or service in exchange for payment at a later date.

Business transaction

An exchange of value that can be measured and that affects the accounting equation

A ___________ is a financial statement that marks a company's financial situation at a moments in time, showing all assets, liabilities and owner's equity.

Balance Sheet

What is an example of an asset?

Cash

Heading for balance sheet

Company Name, Financial Type (Balance Sheet), Date

Heading for income statement

Company Name, Financial Type (Income Statement), For Year Ending (The Date Listed)

In any business, the __________ of a company always have the first financial claim on the assets of a company.

Creditors

Example: Received cash on account from Tina's crab shack

Decreases your account receivable because you're paying off money

Difference between distribution and owner's equity

Distribution - Withdrawn Money from Business Owners Equity - Owners Profits

The financial claims on a company's assets are called ___________, and are organized into two types of claims: liabilities and owner's equity.

Equities

Income Statement

Financial Performance >>>>>>> Revenue and Expenses

Balance sheet explanation

Financial Position >>>>>>>>>> A = L +O.E

A(n) __________ is a debt or obligation owed to any other person or organization, oftentimes referred to as a creditor.

Liability

A(n) ____________ is when money is given to an individual or business in exchange for future repayment of the principal amount plus interest.

Loan

The following is an example of a liability:

Loan

Net is.....

Net Income is when your revenues > expenses and Net Loss is when your expenses > revenues

What is a bank loan title?

Notes Payable

Current balance

Owed all money "owed"; not yet paid.

Owners' Equity is a(n):

Owner's claim on company assets after all liabilities have been paid.

O.E account title

Owner's name, Capital

An asset is what a company:

Owns

Examples of OE

Revenue, Expenses, and Distribution

Net Income

Revenues - Expenses

Income Statement

Summarizes a company's revenue and expenses in a financial statement

Johnathan Milken is starting a lawn care company. He needs to purchase a $4,000 lawn mower but he only has $1,500 saved up to invest in the company. In order to purchase the lawn mower, he borrows the remaining money he needs from his father. After purchasing the lawn mower, what is the accounting equation of Jonathan's lawn care company?

$4,000 = $2,500 + $1,500

Determine the missing amount from the situation given below: Assets = Liabilities + Equity $125,000 = $95,000 + $???

30,000

Expenses

A cost incurred to provide products and services to customers and business up keep

No matter the mix of liabilities and owner's equity, the sum of liabilities and owner's equity will ALWAYS be equal to the _________________ a company owns.

Total Assets

Sole proprietorship

a business owned by one person, and the owner has unlimited liability, meaning the owner can lose more than they invested in the business.

Liability

a debt or obligation owed to any other person or organization.

Account

a record in the accounting system that tracks the increases, decreases, and current balance of a specific asset, liability, equity, revenue, or expense.

Net Worth Statement

a statement that shows the relationship between an individual's assets, liabilities, and equity.

Assets

a tangible or intangible resource that has economic value, owned by a person or organization. Some examples of assets include: cash, inventory, equipment, patents, land, and accounts receivable.

Account payable

amounts due to vendors or suppliers for goods or services received that have not yet been paid fo

assets, liabilities, equity go into what kind of financial statement?

balance sheet

what are the three types of financial statements?

balance sheet, income statement, cash flow statement

expenes and revenue go into what kind of financial statement?

income sheet

example of owners equity

midnight, moon capital, service revenue, equipment rental expense, service expense, office rent

distributions

owners withdrawing money

example of expense

rent

financial statement

shows the financial position of an organization

Account title

the name given to an account

Owner's Equity

the owners' rights to the assets of a business after all liabilities have been paid

What is the accounting equation?

Assets = Liabilities + Owner's Equity

Expanded Accounting Equation

Assets = Liabilities + Owners Equity - owner distribution + revenue - expenses

Net Worth

The difference between an individual's assets and liabilities

Equities

The financial claims on a company's assets

Revenue

The money generated from all sales of goods and services over a certain thine period

Account balance

The net or cumulative difference of all increases and decreases of an account, e.g. the current balance

Brian & Co., Inc. began a new construction company on December 10. The accounting equation below shows the first accounting transaction. Match the given translation with its most likely description. Asset = Liabilities + Equity $3,000 = $0 + $3,000

The owner invested $3,000 cash into the business.

Creditor

The person or organization to whom a debt or obligation is owed

for payments made on account, what is the difference between "account payable" and "account receiveable"

account payable is when you purchase something and have yet to pay it back. PURCHASED. PAID. account recieveable is when you provided someone else a service or product and they have yet to pay you for it. SOLD.

example of asset:

accounts Receivable, cash,

example of liabilities

accounts payable

Accounts Receivable

current balance owed of all money, "owed," not yet paid.

Loan

when money is given to an individual or business in exchange for future repayment of the principal amount plus interest.