Accounting: Chapter 1 & 2 (Vocab/ Key terms)
The liability created by a purchase on account is called...
Account payable
Resources owned by a business are its......
Assets
________=________+________
Assets, liabilities, equity
The _____ ____ concept makes sure company and personal data is kept separate.
Business entity
The assumption that limits the economic data in financial reports to that directly related tot he activities of the business; business and personal are separate.
Business entity
An economic even or condition that directly changes an entity's financial condition or its results of operations is a ....
Business transaction
A list of the accounts in the ledger is called a ________ ___ ________
Chart of accounts
External classification in stockholders' equity...
Common stock
Shares of an ownership distributed to investors of a corporation...
Common stock
The _____ principle records an item at its initial transaction price.
Cost
The normal balance of a liability is...
Credit
The normal balance of an expense is...
Credit
The normal balance of common stock is...
Credit
The normal balance of dividends is...
Credit
The normal balance of revenue is...
Credit
The right side of a T chart is labeled...
Credit
The left side of a T chart is labeled...
Debit
The normal balance of an asset is....
Debit
_______ come before ______ in a journal entry.
Debits, credits
A ________ account represents distributions of earning to stockholders.
Dividends
All businesses use what is called the ____________ accounting system
Double-entry
The rights of owners are called
Equity
GAAP
Generally Accepted Accounting Principles
The process of recording a transaction in the journal is called _______.
Journalizing
A group of accounts for a business entity is called a _______.
Ledger
The ____ _____ concept assumes that money in the past is the same as money in the present.
Monetary unit
The _____ ______ assumption requires that financial reports be expressed in a single money currency; assumes $ in the past is the same as $ now. Normally determined by the country (euros, dollars, pesos)
Monetary unit
Financial accounting and generally accepted accounting principles are based upon the following assumptions: _______ _______, ______ _____, _____ _____, and ______ _______
Monetary unit, Time period, business entity, going concern
_____ _____= revenue-expenses
Net income
For a proprietorship, partnership, or limited liability company, equity is called...
Owners' equity
Items such as supplies that will be used in the business in the future are called ______ ______, which are assets
Prepaid expenses
______ _____ is the stockholders' equity created from business operations through revenue and expense transactions.
Retained earning
Internal classification in stockholders' equity...
Retained earnings
The amount earned for selling goods or services to customers
Revenue
The _______ _______ assumption allows a company to report its economic activities on a regular basis for a specific period of time.
Time period assumption
Accounts payable are _____ agreements to pay in ____ days.
Verbal, 30
Can be defined as an information system that provides reports to users about the economic activities and condition of a business.
Accounting
___________ __________ and __________ provide the framework upon which accounting standards are constructed.
Accounting principles assumptions
___________ __________ are the rules that determine the accounting for individual business transactions.
Accounting standards
Instead of receiving cash right away, a business may accept payment at a later date which is the account...
Accounts receivable
Amounts used to generate revenue
Expenses
_________ has the primary responsibility for developing accounting principles.
FASB
Revenue from providing services is recorded as...
Fees earned
FASB
Financial Accounting Standards Board
The area of accounting that provides external users (investors, creditors, customers, and even the government) with information is called...
Financial accounting
The ____ ______ assumption requires that financial reports be prepared assuming that the entity will continue operating into the future.
Going concern
Recording an item at its initial transaction price is called the....
Historical cost principle or cost principle
The normal balance of an account makes the account _________.
Increase
The rights of creditors are the debts of the business and are called...
Liabilities
______ are debts owed to outsiders (creditors).
Liabilities
The area of accounting that provides internal users (employees) with information is called....
Managerial accounting
The increase/decrease in retained earnings= _____ ______- Dividends
Net income
The net increase in stockholders equity= _______ - dividends- _________.
Revenue, expenses
Who is the boss of FASB?
SEC (Securities and Exchange Commision)
Since stockholders own a corporation, equity is called...
Stockholders' equity