Accounting

Accounting cycle

1)Record journal entries 2)post journal to ledger 3)prepare trail balance 4) prepare financial statement

Business entity concept means

The entity is an individual economic unit for which data are recorded, analyzed and reported

Accruals

Accrued revenue Accounts revivable (Cash we haven't got yet)

The objectivity principle requires that

Amounts recorded in financial statement a must be based on independently evidence- ( we can value it and record it)

Best describes accounting

An info system that provides reports to stakeholders.

Depreciation expense is an... And what it is followed by?

Asset (debit) and Accumulated depreciation (credit)

Prepaid expenses are

Assets

Accounting equation

Assets=liabilities+equity Or Equity=liabilities-assets

Examples of Assets

Cash-supplies-A/R-Equipment-Land-Prepaid Expenses-

Account in proper order-

Cash/AR/supplies/equipment- A/P- Drawing/capital- Service revenue- Operating expense

Public accountants Are...

Certified public accountants

Received cash for service is journalised as

Fee earned which is a revenue

GAAP stands for

Generally accepted accounting principals

Book value is

How much money has not been depreciated

Proprietorships

Individuals own it 70%

Debts owed by business are

Liabilities

Unearned revenue is a

Liability because you haven't preformed task yet

Matching concept

Matching the expenses with the revenue. To find net loss or income

Partnership

More than 1 owner 10%

Deferrals are

Prepaid expenses Unearned revenues (cash)

Accounting a role in business

Provide info to managers to operate business and to stakeholders to make decisions regarding the condition of company

Cost concept

Recorded cost of assets

Owners equity is increased by

Revenue/ capital

Net income is

Service revenue - Operating expenses.

3 types of businesses

Service- Merchandising- manufacturing-

Trail balance is prepared to

Summarize the account balances to help financial statements

Unit of measure concept

US dollar- Let reader know they type of currency

Time concept

We can create segments of time- make time periods