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Distribution - Withdrawn Money from Business Owners Equity - Owners Profits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.