Financial Accounting Ch. 1 and 2

account receivable

A claim against the customer

Balance Statement

A list of the assets, liabilities, and stockholder's equity AS OF A SPECIFIC DATE, usually at the close of the last day of a mont or a year.

managerial accounting

A special field of accounting that uses estimated data to aid management in running day-to-day operations and in planning future operations.

Retained Earnings Statement

A summary of the changes in retained earnings that have occured DURING A SPECIFIC PERIOD OF TIME, such as a month or a year

income statement

A summary of the revenue and expenses FOR A SPECIFIC PERIOD OF TIME, such as a month or a year

manufacturing

A type of business that changes basic inputs into products that are sold to individual customers.

merchandising

A type of business that purchases products from other businesses and sells them to customers.

business transaction

An economic event or condition that changes an entity's financial condition or directly affects its results of operations.

accounting equation

Assets=liabilites + owner's equity

Amounts entered on the left side of the account

Debits

prepaid expenses

Items such as supplies that will be used in the business in the future.

ethics

Moral principles that guide the conduct of individuals.

net income

Results when revenues exceed expenses

The simplest form of an account

T account

revenue

The amount a business earns by selling goods or services to its customers.

Expenses

The amounts used in the process of earning revenue

account payable

The liability created by a purchase on account

assets

The resources owned by a business

liabilities

The rights of creditors that represent debts of a business

An information system that provides reports to stakeholders about the economic activities and condition of a business is ____________.

accounting

Assets = Liabilities + Owner's Equity is the ______________.

accounting equation

A claim against the customer is called a(n) _________.

accounts recievable

Resources that are owned by the business

assets

Amounts entered on the right side of the account

credit

The normal balance of the fees earned account

credit balance

The normal balance of the cash account

debit balance

The account used to record amounts of earnings distributed to stockholders of a corporation

dividends

The system of accounting for recording transactions, based on recording increases and decreases in accounts so that debits equal credits

double-entry accounting

Moral priniples that guide the conduct of individuals are called _______.

ethics

Assets used up or services consumed in the process of generating revenues

expenses

A specialized field of accounting primarily concerned with the recording and reporting of economic data and activities to users outside the business is called _______ accounting

financial

The analysis where the amount of each item on a current financial statement is compared to the same item on an earlier statement.

horizontal analysis

A summary of the revenue and expenses FOR A SPECIFIC PERIOD OF TIME, such as a month or a year, is called a(n) _____________.

income statement.

The initial record in which the effects of a transaction are recorded

journal

The process of recording a transaction in the journal

journal entry

A group of accounts for a business

ledger

Debts owed to outsiders (creditors)

liabilities

The rights of creditors that represent debts of the business are called __________.

liabilities

A specialized field of accounting that uses estimated data to aid management in running day-to-day operations and in planning uture operations is called ________ accounting

managerial

The rights of the owners are called ______________.

owner's equity

The process of transferring the debits and credits from the journal entries to the accounts

posting

Items such as supplies that will be used in the business in the future are called _____________.

prepaid expenses

A summary of the changes in the retained earnings equity that have occured DURING A SPECIFIC PERIOD OF TIME, such as a month or a year, is the _______________________.

retained earnings statement.

The amount a business earns by selling goods or services to its customers is called ___________.

revenue

An error in which the entire number is moved one or more spaces to the right or left

slide

An error in which the order of the digits is changed

transposition

accounting

An information system that provides reports to stakeholders bout the economic activities and condition of a business.

business

An organization in which basic resources (inputs), such as materials and labor, are assembled and processed to provide goods or services (outputs) to customers.

owner's equity

The rights of the owners

An accounting form that is used to record the increases and decreases in each financial statement item.

account

The liability created by a purchase on account is referred to as a(n) _______________.

account payable.

The resources owned by a business are called _______

assets

The amount of the difference between the debits and the credits that have been entered into an account

balance of the account

A list of the assets, liabilities, and stockholders' equity AS OF A SPECIFIC DATE, usually at the close of the last day of a month or a year, is called a(n) ________________.

balance sheet

An economic event or condition that directly changes an entity's financial condition or directly affects its results of operations is called a(n)____________.

business transaction

A list of the accounts in the ledger

chart of accounts

A type of business that changes basic inputs into products that are sold to individual customers is a(n) ____________ business

manufacturing

A type of business that purchases products from other businesses and sells them to customers is a(n) ______________ business.

merchandising

Increases in stockholder's equity (retained earnings) as a result of selling services or products to customers

revenues

The right of stockholders to the assets of the business

stockholder's equity

A summary listing of the titles and balances of accounts in the ledger.

trial balance

An all-purpose journal

two-column journal

The liability created by receiving revenue in advance

unearned revenue