ACC 224 -- Exam 1

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Income Statement

A financial statement showing the revenue and expenses for a fiscal period.

Statement of Cash Flows

A financial statement that provides financial information about the cash receipts and cash payments of a business for a specific period of time.

Balance Sheet

A financial statement that reports assets, liabilities, and owner's equity on a specific date.

Unearned Revenue

A liability representing a company's obligation to provide goods or services to customers in the future.

Financial Statement

A summary of all the transactions that have occurred over a particular period.

A = L + SE

Accounting Equation

Credit

An arrangement to receive cash, goods, or services now and pay for them in the future.

Debit

Any transaction that increases the assets of a firm or reduces liabilities.

Accrued Expense

Expenses incurred but not yet paid in cash or recorded.

Financial Accouting

External users of accounting information

1. income statement 2. statement of changes in stockholder's equity 3. blance sheet 4. statement of cash flows

Four Financial Statements

GAAP

Generally Accepted Accounting Principles, Accounting rules that are used universally

Financial Accounting Standards Board

Group that has the primary responsibility for establishing generally accepted accounting principles

IASB

International Accounting Standards Board, board that consists of accountants from different countries that develop accounting rules

Accounts Receivable

Money an organization's customers owe the organization.

The General Journal

Most often used by a business each entry represents a different bus transaction which is recorded only once

Prepaid Items

On a closing statement, items that have been paid in advance by the seller, such as insurance premiums and some real estate taxes, for which he or she must be reimbursed by the buyer.

Accounting is an information system that reports on the economic activities and financial condition of a business or other roganization

Role of Accounting in Society

Revenue and Expenses

Types of Transactions

Accouting Period

a company's operations that occurred over a span of time called this

Transaction

a particular kind of event that involves transferring something of value between two entities.

Trial Balance

a proof of the equality of debits and credits in a general ledger

Accounts Payable

amounts that a firm currently owes to other parties

Accounting Event

an economic occurrence that changes an enterprise's assets, liabilities or stockholder's equity.

Net income

if revenue exceed expenses, the difference is called this.

Net Loss

if the expenses are greater than revenues, the differences is this.

Adjusting Entries

journal entries recorded to update general ledger accounts at the end of a fiscal period

Income statements

match revenue (benefits) with the expenses (sacrifices) that were incurred to generate the revenue

Horizontal Financial Statements Model

shows a set of financial statements horizontally across a single page of paper

Managerial accounting information

the accounting information needed by internal users, stakeholders such as managers and employees who work within a business, is provided by this.

Revenue

the economic benefit a company derives from providing goods and services to its customers is called this.

Matching concept

the practice of pairing revenues with expenses on the income statement is called this.

Adjusting the Accounts

updating the accounts at the end of the period

The Closing Process

verify contract fulfillment; exchange consideration and title; pay expenses; sign final documents; arrange for recording the transaction

Double-Entry bookkeeping

when all transactions affect the accounting equation in at least two places.


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