Accounting 212 exam 1

credits, decreases

accumulated depreciation has a normal..... balance which indicates that it...... total assets

long term assets that lack physical substance

amortization refers to

classified balance sheet

assets, liabilities, and stockholders equity are listed in separate categories presents information about an entity's assets, liabilities, and shareholders' equity that is aggregated (or "classified") into subcategories of accounts. ... Current assets. Long-term investments. Fixed assets (or Property, Plant, and Equipment)

private corporations

doesn't offer or trade companies stock

double entry accounting

every business transaction will involve two accounts (or more). For example, when a company borrows money from its bank, the company's Cash account will increase and its liability account Loans Payable will increase.

revenues are recognized when earned

revenue recognition principal

credit

revenues increase with a....

separate entity assumption

separately recording the transactions of a business and owners

public corporations

shares are publicly traded

chart of accounts

a financial organizational tool that provides a complete listing of every account in an accounting system. An account is a unique record for each type of asset, liability, equity, revenue and expense.

time period assumption

allows the accountant to divide up the complex, ongoing activities of a business into periods of a year, quarter, month, week, etc.

current assets / current liabilities Potential creditors use the current ratio to measure a company's liquidity or ability to pay off short-term debts.

current ratio equation

record expenses in the same period as revenues to which its associated with

expense recognition principal (matching)

stockholders equity

expenses are located under..... on a balance sheet

general ledger

houses the company's accounts.

external users

investors and creditors

income statements

is a financial statement that reports a company's financial performance over a specific accounting period. Financial performance is assessed by giving a summary of how the business incurs its revenues and expenses through both operating and non-operating activities.

statements of cash flows

is to provide information about cash receipts, cash payments, and the net change in cash resulting from the operating, investing, and financing activities of a company during the period.

general journal

it is a chronological record of the transactions, showing an explanation of each transaction, the accounts affected, whether those accounts are increased or decreased, and by what amount.

internal users

management and operational managers

net income/ total sales x 100 it's the percentage of profit from business operations after you've deducted business operating expenses, interest expense, taxes and preferred stock dividends from revenues.

net profit margin ratio equation

general journal

place to first record an entry before it gets posted to the appropriate accounts.

trial balance

prove that the value of all the debit value balances equal the total of all the credit value balances. If the total of the debit column does not equal the total value of the credit column then this would show that there is an error in the nominal ledger accounts.

unclassified balance sheet

reports your assets and liabilities, but does not separate the items into classes. used for internal purposes only